The set-up: Oil has found a short-term bottom – and only a short-term bottom – and the commodity is due for a rise. But I’d rather play individual stocks than the commodity, because when oil finds some strength the individual names will go up a bigger percentage than the commodity itself and strong companies like Resolute will lead the way.
Resolute has great fundamentals and is oversold. Look closely at Tuesday’s action, and you’ll see that the first daily candle was put in for an oversold bounce. The perfect entry point is at the beginning of that kind of movement, so you have the ideal entry point for a day or swing trade.
Upside potential: From here, I think the stock could go as high as $33 in short order.
How I am playing it: I’ll be buying at the open with the stock below $31.20. I’ll set my stop-loss near yesterday’s low ($28.55), but I expect to be taking profits on this, which I will start doing above $32.
Taylor Conway is the lead day trader at PennyPro.com. He is a short-term day trader of stocks and ETFs. At the time this article was published on RagingBull.com, he had no open positions, options or orders in REN, but he was planning to buy it and trade it as described in the article. He has not traded the stock this year, having last made a move in it in December 2016.