In This Pullback It Is Time To Refine
- Posted by Greg Harmon
- on July 31st, 2014
The charts of the refining stock had a good look to them during this weekends review. Problem was that they reported earnings this week. I don’t avoid stocks that report earnings outright, but I am reluctant to take a position ahead of a report based on the chart alone. So with so many others to choose from I generally put on the sidelines, like a timeout for my kids. One earnings are out then I re-look at them to see if there is still potential for a trade. Well two of them, Valero, $VLO, and Tesoro, $TSO, reported yesterday and today and they do still look good. Take a look.
Valero popped higher after earnings and has moved through two minor resistance levels. With only a 3rd overhead at 52.20 before it can challenge the gap higher to 56 it looks good for more. The RSI is over the mid line and running hard higher with the MACD continuing up as well. A trader could get long the stock higher or over that last resistance and use the 20 day SMA at about 49.40 as a stop for a defined risk trade.
Tesoro traced out a ‘W-V’ pattern as it consolidated over the first half of 2014. It broke above this at 58.50 in June and has been consolidating over that breakout level with a minor pullback to support earlier this month. It is Thursday’s price action in a weak tape that is most interesting. The price is testing the top of the break out move at 62.30 with the RSI rising and in the bullish range, the MACD crossed up and the Bollinger bands opening higher. These all support further upside. It may not break today but it is showing real strength.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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