Go Long on Utilities XLU, If You've Missed Shorting Oil
Following OPEC's decision to not to reduce Crude oil production on 27 Nov 2014 Thursday, we note a steep drop on Oil related stocks (ie XOP) on Black Friday Morning.
Share prices of Airlines have also continued rally on the upside (ie DAL).
While we may run the risks of pullbacks if we were to join the Short Oil/ Long Airlines positions, here is an idea on Utilities Select Sector ETF (XLU), which is poised to follow suit for a breakout.
(1) Price has traded steadily in an upwards trend channel starting from June 2010 and up till now. Price has risen from about $28.00 to $46.00 now, trading and sustaining past the 2008 high of $44.40.
(2) Starting from 19 June 2013, we note an acceleration trend line has been formed, based on the lows of the prices, marked by the purple line.
This acceleration of prices has brought prices to break out of the upper trend line of the channel, for the second time.
It is an indication that market is gaining momentum for a strong vertical breakout in prices on the upside.
Seasoned Elliott wave traders should also recognize that a potential 5th Impulse wave will be formed upon breakout.
(Projection)
Very Bullish: From observations raised in points (1) and (2), we conclude that price is most likely to accelerate further from current price level and "liftoff" to a close to vertical breakout on the upside.
(Stop Loss)
Below $44.80.
(Target)
$50.00. (About 8% return from current price levels)
(Time Limitation)
This vertical breakout should reach the price target by 06 Jan 2015.
(Risk)
There is always the risk of a false breakout, where price will be resisted at the previous high of around 46.60s.
References:
News on OPEC's Decision
bloomberg.com/news/2014-11-26/dollar-holds-losses-after-crude-extends-slump-before-opec.html
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Share prices of Airlines have also continued rally on the upside (ie DAL).
While we may run the risks of pullbacks if we were to join the Short Oil/ Long Airlines positions, here is an idea on Utilities Select Sector ETF (XLU), which is poised to follow suit for a breakout.
(1) Price has traded steadily in an upwards trend channel starting from June 2010 and up till now. Price has risen from about $28.00 to $46.00 now, trading and sustaining past the 2008 high of $44.40.
(2) Starting from 19 June 2013, we note an acceleration trend line has been formed, based on the lows of the prices, marked by the purple line.
This acceleration of prices has brought prices to break out of the upper trend line of the channel, for the second time.
It is an indication that market is gaining momentum for a strong vertical breakout in prices on the upside.
Seasoned Elliott wave traders should also recognize that a potential 5th Impulse wave will be formed upon breakout.
(Projection)
Very Bullish: From observations raised in points (1) and (2), we conclude that price is most likely to accelerate further from current price level and "liftoff" to a close to vertical breakout on the upside.
(Stop Loss)
Below $44.80.
(Target)
$50.00. (About 8% return from current price levels)
(Time Limitation)
This vertical breakout should reach the price target by 06 Jan 2015.
(Risk)
There is always the risk of a false breakout, where price will be resisted at the previous high of around 46.60s.
References:
News on OPEC's Decision
bloomberg.com/news/2014-11-26/dollar-holds-losses-after-crude-extends-slump-before-opec.html
Like it, Share it, Follow it~
Trading View: BreakOutArtist
StockTwits: stocktwits.com/BreakOutArtist
Twitter: twitter.com/BrkOutArtist
TradeHero: BreakOutArtist
Facebook: facebook.com/brkoutartist
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