Crude Setups, Oorah!

If you read my previous post from earlier in the day (https://tradingeh.wordpress.com/2011/04/09/eyes-on-the-road/) you already know my sentiments about where Crude is going. Price action will determine how quickly we reach a tipping point. In the meantime (estimating until May) we still have a lot of room to the upside. Here are some of my favorite picks moving forward. Note: These will all be played with Options (Mays most likely). Do your own research – these are my thoughts. They will all be calls on tight leashes intra-week to intra-month moves holding the refiners to earnings in late April.

Canadian Oil Sands/Reserve plays:
The only conflict over these companies is the amount of Wachovia certified nose candy the workers use the night before.

Cenovus ($CVE):

Suncor ($SU):

I already rode the initial breakout and SMA(50) test, however if the gap continues to fill I will be contemplating re-entry.

If you don’t like these plays, other Canadian oil/energy stocks include $CNQ $BTE and $IMO.

Refiners:
In the wake of lost Japanese refining capacity, crude flying, and the correlation to crack spreads (refining process and determining the profit margins of the companies are priced against) there has been a lot of upside. However, I do not think they are done heading up and I am currently holding $WNR (looking to average in) and will be watching $VLO for entry next week. With the run, their financials reported at the end of April should blow expectations out of the water and should see all of these refiners breakout – ideally the financials will be priced in a with a run up to earnings.

Western Refining ($WNR):


Valero Energy ($VLO):


I would not be surprised to see both WNR and VLO gap up or down in the pre-market – I will likely wait for the opening hour of noise to determine price/volume for entry.

Keep your eye on Crude futures, Crack spreads, and the amount of Freedom Bombings being handed out by NATO(America).

-Ked

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