Reversing Refiners

• Posted by Greg Harmon
• on October 15th, 2012

Small independent oil refiners’ stocks had great runs higher throughout the summer. Straight up in many cases. No chance to get in. Then they all started to rollover. Now there are signs that these two are ready to reverse back higher. Take a look.

Phillips 66, $PSX

Phillips 66, $PSX consolidated for a month at in the 45-47 range before pulling back. Last Friday though it printed a potential bullish reversal candle, a Hammer, which it confirmed higher Monday. But in addition to that the Relative Strength Index has turned back higher and the Moving Average Convergence Divergence indicator (MACD) has leveled. It also halted at the 50 day Simple Moving Average (SMA). It could certainly continue lower, but with all these signs lined up it is worth considering a long trade entry against a stop near 43.

Valero Energy, $VLO

Valero Energy, $VLO, is a little bit dicier, but also worth a look. The two Hammers back to back with long tails as the volume is decreasing after the climax selling on Wednesday last week, along with a RSI that is nearing oversold territory suggest that dipping your toe into a long trade against a stop at 28 is worth considering.

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Dragonfly Capital Views Performance Through September 2012 Expiry

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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