Closing the Oil Trade: Baker Hughes Incorporated (NYSE:BHI) and ProShares Ultra DJ-UBS Crude Oil (NYSEARCA:UCO)

At Stock Traders Daily, on Monday we officially recommended that clients take profits from their oil related trades. On Nov. 2, we issued buy recommendations on oil and oil stocks in advance of what we anticipated to be a blockbuster OPEC deal that would spur oil prices from bearish to bullish.

The observations were predicated on Saudi Arabia and the reversal in posturing that took place as leadership transitioned in the oil space, but even more precisely on the additional vested interest Saudi Arabia had in securing a deal to support oil prices.

Sign Up for Free Trial

Over and above the economic interests shared by it and other oil-producing countries, Saudi Arabia is planning an IPO of their oil assets, and in doing so, they want to get the best price possible when they go public. The only way to do this is to support oil prices, and that is exactly what they intended to do many months ago when they suggested the deal to OPEC.

Anyone looking at this objectively with a simple understanding of the fear and greed and political posturing involved could see that the odds of a meaningful deal were high. It seemed as if the media thought otherwise, even smart-money investors, and on the heels of this blockbuster deal, oil prices have spiked as a result of short-covering.

The increases we have seen recently were not just related to the support of prices, but more importantly, short-covering drove prices higher, and significantly so, and very quickly.

Arguably, prices have moved too far too fast, and we are taking profits. The best performers of these six recommendations were Baker Hughes Incorporated (NYSE:BHI)  and ProShares Ultra DJ-UBS Crude Oil (NYSEARCA:UCO)  with 20.5% and 24.2% returns respectively in just over one month. We will continue to monitor these, of course, in addition to identifying other market-based opportunities as they come, and alert clients appropriately.

Additionally, there are risks on the horizon given the meeting of non-OPEC producers later this week because ultimately the OPEC deal hinges on them reaching an agreement to cut 600,000 barrels or more from their combined production. If that doesn't happen, the OPEC deal falls apart.

For now, we have no exposure to oil, long or short, but that may change if the market comes to us.

Here are our recent results:

Company

Symbol

Entry Date

Price

Exit Date

Price2

Result

Exxon Mobil Corp

(NYSEXOM)

11/2/2016 10:00

83.45

12/5/2016 9:44

87.12

4.40%

Chevron Corp

(NYSE:CVX)

11/2/2016 10:00

105

12/5/2016 9:44

113.09

7.70%

Schlumberger NV

(NYSE:SLB)

11/2/2016 10:00

77.76

12/5/2016 9:44

84.48

8.64%

BP PLC

(NYSE:BP)

11/2/2016 10:00

34.01

12/5/2016 9:44

35.56

4.56%

Baker Hughes

BHI

11/2/2016 10:00

54.46

12/5/2016 9:44

65.65

20.55%

Ultra WTI

UCO

11/2/2016 10:00

9.05

12/2/2016 13:44:00 AM

11.24

24.20%

Technical Summary

Term →Near Mid Long
Bias Strong Strong Neutral
P1 61.73 58.70 50.63
P2 64.23 62.34 56.71
P3 66.28 66.55 63.13

Long Term Trading Plans for BHI

December 6, 2016, 9:43 am ET

The technical Summary and associated Trading Plans for BHI listed below will help you make important timing decisions for your trades. This data is based on our proprietary analysis for BHI. In addition we offer Market Timing Models and Stock Filters in the links above which may increase the proficiency of the decisions you make.

BHI - (Long) Support Plan

Buy over 63.13 target n/a stop loss @ 62.87.
The technical summary data tells us to buy BHI near 63.13, but there is no current upside target from the summary table. In this case we should wait until either an update to the summary table has been made (which usually happens at the beginning of every trading day), or until the position has been stopped. The data does tell us to set a stop loss 62.87 to protect against excessive loss in case the stock begins to move against the trade. 63.13 is the first level of support below 65.53, and by rule, any test of support is a buy signal. In this case, if support 63.13 is being tested, a buy signal would exist.

BHI - (Short) Resistance Plan

NONE .
There are no current resistance levels from the summary table, and therefore there are no Short resistance Plans which tell us to short upon tests of resistance. Resistance levels have broken higher and unless the stock reverses lower and below support levels again short positions look risky.


BHI Long Term Analysis


BHI Growth rate - Quarterly

BHI Growth rate - Yearly

share_linkedin