Why it’s on my radar: Late last week, oil hit its support level from February 2016. What got me intrigued about the iPath S&P GSCI Crude Oil Total Return Index ETN (OIL) – as opposed to SPDR S&P Oil & Gas Exploration & Production (XOP) and Van Eck Vectors Oil Services (OIH) – was a bounce off of support.

   The potential: I looked at OIL’s underlying holdings and many are putting in beautiful short-term bounce plays. I’m not talking about loading up the bank for a long-term play. I’m looking for a bounce-back on a lot of these stocks to the top of their channel. Especially on the cheaper ones, you could get a 10 or 15 percent pop going into next week.

   How I’m playing it: Friday was the first day I saw OIL bounce off support. Now I’m looking for a follow-through, a confirmation.

   If OIL trades over $4.52 on Monday, I’ll go long, with $4.98 as my ultimate target. If I make that trade, I will run this position with a 3 percent trailing stop.

   What else I’m doing in the sector: I entered one individual oil play Thursday – Encana Corp. (ECA.to), 2,000 shares at $10.84. Because there’s a gap on the chart, I’ll sell half of my position at $11.50 and another quarter at $11.82. My current stop is at $10.87; if we get above my targets, I’ll use a trailing stop to protect my gains.

   Another factor: With the July 4th holiday on the horizon, I’ll start to wind things up going into Thursday. I’m not a big fan of taking risks on Friday afternoon and we know Monday, July 3 will be a quiet day. It’ll give you a nice span to sit back and relax from the market.


   Petra Hess runs PetraPicks.com. She is a technical swing trader and long-term investor in domestic and Canadian stocks and ETFs. She only trades shares, not options. At the time this article was published on RagingBull.com, she had no shares, or open orders in OIL, but did hold ECA.TO. She is planning to trade both as described in this article.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

Learn More

Leave your comment

Related Articles: