Trade of the day: don’t chase shares of Phillips 66

Oil prices grow over the last seven trading days amid renewed tensions with Syria, among other things. As the result, energy reserves, such as company Phillips 66 (US:PSX) was on the rise. Even though the stock for the PSX looks constructive long-term lens, in the short term is becoming increasingly overbought and at risk of stalling or mean-reverting below.

Not every sector of the stocks in the S&P 500 index and has a single clear “thing” that causes it to move in the direction of the energy sector does. For the energy sector — ceteris paribus — this is simple; the oil makes a good move up or down and oil stocks usually follow. Of course, not all energy and oil stocks will move synchronously, but there is undoubtedly a strong positive correlation.

Phillips 66 Stock Charts


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Moving averages legend: red – 200 a week, blue – 100 a week, yellow – 50 a week

Put some pictures around of this, let’s first start with the multi-year weekly chart. Here we see that for PSX stock for the most part the second half of 2015 to October 2017 traded in the range as indicated by two blue stripes.

By October 2017 the stock began to break out, not surprisingly, at least in part due to the less noticeable rally in oil prices. The stock then went into a parabolic rally in December and in late January of 2018, where he just could no longer keep the pace and stopped dead in his tracks.

Then the stock fell sharply to 15% for a few weeks before finding support at the upper blue box on the chart. Classically bullish trend through the lens of technical analysis is a simple test to breakthrough point, which is to say that after the former resistance became support.

Last rally over the last few weeks have been constructive, and received shares directly back to the end of January highs.

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Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 days

Although it looks and sounds more constructive on the graph above picture, my fears at the top of this promotions are around more short-term time frame.

On the daily chart we see that the rally over the past few weeks now for the PSX is very overbought from the point of view of the dynamics of the MACD oscillator at the bottom of the chart.

Phillips 66 will announce its next batch of earnings in about a week and a half on April 27, and from my side, this is not the action, I want to be in profit.

The stock should rally after earnings (from current levels), it could offer the ability to disappear/move for a short trade. In addition, if shares fall after earnings, you can buy the next bullish reversal.

There are various strategies to take advantage of this setup in the stock PSX and to generate trading revenues. Today I will talk about my favorite this strategy in a special webinar for InvestorPlace readers; using the Implied volatility of permanent income. Sign up here.

Now, though, my first post on this stock don’t chase it higher at the current levels with swing trading view. And in fact make profit will be a wise choice if one was caught of the last multi-week rally.

Check out Anthony Mirhaydari via the Daily market review for April 17.

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