You need to know this fundamental change in oil's character

Swing Traders focus on two key elements when assessing a stock's trend, volume and price action.  Volume often precedes price action as the big players leave footprints that are tough to hide.

During oil's parabolic downtrend, volume has consistently shown a distribution pattern while basing before it's next leg down.  However, the current volume pattern has changed the character of the oil ETF, USO.

Notice that the current basing range over the past 8 trading sessions, we see increased volume.  Not only has there been an influx of volume, the pattern shows positive accumulation, as upside volume clearly outpaces negative volume.

This often occurs before a strong bounce or change in trend.  When I see this type of clear change in character, I start accumulating.  I already have a position in oil and may look to add some more.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis,setups and trade alerts, sign up for a 14 day free trial at BullsonWallStreet.com.  

If you like this article, follow me on twitter

Trade: DXO (Leveraged Oil ETF)

I entered 600 shares of DXO at $2.65. This is a new, leveraged oil ETF. Price is near lows (support), stochastic is oversold and RSI shows a positive divergence. I consider this somewhat of a speculative trade with limited risk.

5 Profitable Energy Charts

Here are 5 interesting energy stocks. I've included longer term charts. Each has a slightly different pattern and can be played in multiple ways.

RIG (Transocean, Inc.) is looking good right now. We've got a support converging at both the breakout point and the 50 day moving average. My only concern is there doesn't look to be heavy accumulation right now. Still, it might be a good low risk play here.



SWN (Southwestern Energy Co.) has been trending and shows a nice accumulation pattern.



DNR (Denbury Resources, Inc.) is the most "iffy" of the group. The trend has been up and down, but if you can catch the right bounce, it has been profitable. It's pulling back to the 50 day moving average.



APA (Apache Corp.) has been trending along the 50 day moving average and shows decent accumulation.



ARD has been digesting some major gains, but could be a nice play around the 50 day moving average.



I see some low risk, high reward plays here, as long as the entry is timed correctly.

Boone Pickens on Oil

No surprise here, oil tycoon Boone Pickens is an oil bull. According to Mr. Pickens, we are not near a top, although there could be a short term correction. I'm looking to buy on a pullback to the mid 70 range.



MT Trade

Building a Better Watchlist

Trade Update: QID, QID (not a typo) and VLO

I sold 1000 shares of QID at $56.55 (entry at $53.82) for a $2730 gain (+4.8 %). To be honest, I probably would have held on if it was not for the fact that I had a limit order in place overnight. So I re-entered a few minutes ago.

I bought 500 shares of QID at $55.21. I still think the market has more downside momentum.

I sold 300 shares of RL at $85.45 (entry at $87.10) for a loss of $495 (-1.8%). So much for retail holding up.

I bought 300 shares of VLO at $56.90. My reasons are two fold. First, as a small hedge agaist my shorts. Second, I like the way oil services stocks have held up. If you look at VLO's chart, it looks like a typical pullback after a runup, which is opposite of the plethora of charts that look downright ugly.



Currently my only positions are QID and VLO. This week, I have incurred $3541 in losses and $5675 gains for a total gain of $2134.

I'm thankful that I made it out alive (so far). However, there should me more tough trading days ahead. It's not the time to take big risks or become complacent.

CAL's Inverse Correlation with Energy

Today I went short on CAL, an airline stock, and went long USO (U.S. Oil Fund). Most likely, this trade is either going to pay off handsomely or hurt badly. I don't see much hope for any middle ground, as the stocks have had an inverse correlation over the past month. Oil goes up, airline stocks go down, and vice versa. I probably should not have played two entries that are so closely tied to one another. However, the charts told me those were the moves to make, so I didn't talk myself out of the trades.

Take a look at this chart below comparing CAL to OIH over the past month (USO's move is very similar to OIH), and note how perfectly these stocks move against each other.

Today's Trades: CAL and USO

I re-entered a 500 share short position in CAL at $41.60. This is an aggressive play, as the stock has not yet broke the forming head and shoulders pattern.

I also bought 500 shares of USO at $46.80. My target is $50, which is just under the 50 day moving average. The MACD and RSI look good, although I am a little concerned about the lack of volume on this upswing, in relation to the volume on the downturn. My gut is telling me to ignore the volume trend becausethe increased volume on the downswing is a sign of capitulation (note that volume during the "meat" of the move was actually quite low), but only time will tell.