Comments on: DRIP XOP Trade Idea & Entry

By: FrancisQ

FrancisQ — Fri, 18 May 2018 07:25:04 +0000

In reply to rsotc. Thanks. Good to know.

By: rsotc

rsotc — Thu, 17 May 2018 21:03:02 +0000

In reply to FrancisQ.

Yep, good question. I see more downside in DRIP, which is 3x the same sub-sector as XOP, than ERY, which is the 3x short for the same sector as XLE. From where we closed today, I see about 1.4%, 4.2% & possibly 5.3% downside in XLE vs. 2.8%, 5.65% & quite possibly 8.5% for XOP. Each of those 3 levels aligns on the charts of both XLE & XOP as today’s gap, the May 9th gap on XOP & then the top of the sideways trading range in both from 4/18 – 5/4.

For the most part, XOP has more ‘kick’ than XLE because XLE is top-heavy with huge mega-cap stocks like XOM & CVX (which alone, account for almost 40% of the returns of XLE) with XOP comprised of oil & gas E&P stocks with smaller market caps which results in large price swings during bull & bear trends vs. mega-caps stocks.

By: FrancisQ

FrancisQ — Thu, 17 May 2018 19:17:39 +0000

In reply to rsotc. Any reason for your preference of DRIP over ERY?

By: rsotc

rsotc — Thu, 17 May 2018 17:54:44 +0000

I was planning to hold off for an official short on the energy stocks while waiting for some fairly strong technical evidence of a reversal but upon further review of the charts, I decided that while buying DRIP here is certainly trying to catch a falling knife, there is enough evidence in the charts along with an attractive R/R based on the downside risk if stopped out vs. the profit potential if T1 and especially T2 or the potential T3 are hit, to make a compelling case for a long, albeit, aggressive entry on this counter-trend trade. As always, pass on this trade if it does not mesh with your trading style, risk tolerance or objectives.