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The Oxen Report: Jobless Claims and Trade Balance to Direct Market Movement

Hey all. I apologize for missing yesterday. We are back on today. Tuesday was a semi-okay day. We continued our short sale of AMD, which we got stopped out on for a 3% loss at 6.65. The stock just has had too much upward momentum, but I think it still looks to be a strong long term short if you are looking for any longer positions. Our Buy Pick of the Day was Ultrashort Proshares Financials (SKF), which we got into at 25.05 in the morning. The stock did not hit 25.55, our lower exit point. We sold at the end of the day at 25.37 for a 1.25% gain on the day. It was a .75/2 in my opinion. 

Let’s get into our picks for Thursday…

 

Buy Pick of the Day: Direxion Daily Energy Bull ETF (ERX)

Analysis – Over the past few days, oil has been hit hard by the stronger dollar, dropping significantly in price. Today, however, it is the first time we are seeing the dollar starting to make a strong reversal and move back down. The market is reacting well, and futures are up at this point in time. The Dow as of 8:45 AM was up 54 points. The market is also rallying off a better than expected trade balance numbers. We had a large drop in the trade deficit, which is positive for the American economy, especially since analysts were expecting a rise in the deficit.

Oil, itself, got some great news yesterday, with crude inventories dropping 3 million barrels over the past week. This is a pretty significant number released by the EIA. Oil did not, however, rally on the news yesterday. With the combination of  a weaker dollar and the inventories, we can expect oil to start to move back upwards. It has dropped much too fast. I think the drop was fundamentally sound, and oil is still overpriced. Yet, this market does not always work on the fundamentals.

If oil is going up and the market is going up, then Direxion Daily Energy Bull ETF (ERX) looks to be a solid place to play our hand. The ETF has dropped slightly over 20% in the past three weeks in value due to the lowering oil prices and an overpriced ETF. Now, however, the ETF is sitting at the very bottom of its stochastics, but they appear to be leveling out, showing a movement up from its oversold nature. The RSI is at an extremely low level, and the stock has been riding its lower bollinger band for the past two weeks. All is set up for a pop in this one, and if things can really get moving today, you can expect one.

Get in early because we like a nice rally on ERX!

 

Entry – We are looking for an entry of 36.30 – 36.40.

Exit – Wanting to exit on a 2-3% gain.

Stop Loss – Set at 3% on bottom of entry.

 

Good Luck and Good Investing,

David Ristau


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  1. Oxen Report Entry/Exit

    ERX – We entered the ETF at 36.40 this morning. The ETF opened much higher than expected and had big gains that we missed, but it came all the way back down to our range, which is where we got involved. From our entry, we are looking for an exit of 37.13 – 37.49. We have hit the 2%, but we are holding for 3% and will sell if we get back down to 37.13. 

    Good Investing!


  2. Good call, David. I wonder though if it could be a good play in the longer term.
    David, if you don’t mind me asking, I see you are using stockcharts for your charting. Would you recommend their paid services (if you use those)?


  3. Fuzz – I do not use their paid services. Its just the easiest way to grab a quick chart to throw in the story, so I can’t really give you any advice there. Yeah I think you have to believe oil hit its low and is probably on its way back up…it is extremely cyclical. Over the next two to three weeks, ERX is probably a pretty solid play…but I don’t know if I would play the Direxion over long periods of time. DIG might be a bit safer.


  4. Oxen Report Midday Message

    ERX – We worked ERX for a solid 3% gain today. The key was our entry price. We made it significantly lower than the open and waited for a pullback. When that pullback occurred, we got a perfect entry point right as demand increased and send the ETF up 3%. Hope you were able to follow and make some good money. In at 36.40, out at 37.49!

    Good Investing!


  5. Well, since we are allowed to ask any kind of questions here … I will go for one :)
    Does anyone know of a service that would alert you (email or SMS or something else) when a price of a given stock goes above/below a preset threshold? I usually hold a couple of stocks that have a potential to go up/down significantly in the after/pre hours that are hard to either time or predict what the price in/decrease would be and I don’t always have the time to check the market before it opens. It would be nice to be able to set an alert to go out whenever a stock goes out of some bounds that you set for it.