So with the news of the M&A between XTO and XOM, many of the oil names are running from their previous oversold state-- this shows how technical "breakdown" trades in any particular sector have been treated.
Without any of this knowledge and just looking on how the oil sector and individual names were trading, I thought it might be worth for a shot on Friday for my subscribers to pick up some long exposure in some names that were showing technical improvement. My trade plan was laid out in this post:
On the shorter term, [CHK] looks to be breaking out of its range.
1. Get long at these prices
2. Set a stop for 22.92 (yesterday's afternoon pivot low)
3. Reduce position at 24.50, move stop to break evenprovement.
So if you take a look at friday's price action, this was a run-on-the-obvious-stop-then-hold-the-bid trade-- we've been seeing a lot of these in this market. That tells me to reduce position size and widen stops until we get a clearer signal and with the break above resistance in small caps, I think we found it!
The low tick of Friday afternoon's price action just happened to be 22.90, and then price shore up and we had the strong gap up this morning.
Fortunately a few of my subscribers saw what happened here and on the short term, there was no further pullback coming as the bid held through the lunchtime session. Those that had a keen eye were treated to some nice gains in the A.M.
One member (@stotrader) saw that the price action did not indicate true weakness, so he held through the weekend. He's now in a very advantageous position going into options expiration:
I also received this email from another subscriber who took the CHK long call and adapted it to his trading style:
I SOLD 17 CONTRACTS BETWEEN 2.50-260.GAIN AROUND 2000$.
THANKS FOR THE TRADE,
It's great to see that my subscribers are smart enough to notice when a good trade idea with the right execution parameters can pay off very well, even when my original idea doesn't work out.