Hi Folks,
I just wanted to give an update and technical trade review on a recent trade that Art of Trading made. $OXY! We entered the trade on August 18th @$65.15. We sold half of the position into strength the following day @$71.80 and held the second half for more upside potential. We closed the second half of the position out higher @$73.70 on August 23rd.
In this trade review we will cover what made this trade setup attractive to me and how relative strength plays on weak market days can be a great way to spot the strongest stocks before they make BIG MOVES higher.
On August 18th Art of Trading private members were alerted long $OXY @$65.15. What stuck out to me about $OXY this day were the relative strength attributes. While the market traded near flat $OXY was making a strong move higher, just over +3% on the day. Pair that attribute with a very bullish consolidation type pattern and you have a strong recipe for a pending breakout higher!
I tweeted this:
The very next day $OXY continued to flex its strength against the market. While the market traded down near 2%, $OXY stayed strong and actually went from Red to Green (R2G) one hour into the trading session! This is a very bullish development!
Here is what I was seeing:
Shortly after this observation a news headline dropped adding fuel to the fire which made this trade EXPLODE higher!
Berkshire Hathaway Inc. was given approval to buy as much as 50% of the current shares available.
Volume began to pour into the stock sending it higher and fast! It would make sense that the stock was showing relative strength leading into this news. Someone almost always knows something before big news catalysts like this come out into the public eye!
We took advantage of this timely news headline and used it to book half of the trade late in the day!
Take a look at the volume shortly after the news headline dropped!!!
On Monday the stock gapped down slightly but made a high and relatively tight ranged inside day candle. You’ll often see these types of candles after strong moves in stocks. The important areas to note on these types of candles is the upper and lower price range. Often times once the upper or lower price range of the stock is broken the next day the stock will make a quick move higher or lower depending on what side of the range is broken.
Here is what that looked like on $OXY:
Strength continued into Tuesday and began to run into prior resistance and highs made in late May of this year. I didn’t want to see the stock pullback against this area so I decided to book the second half of the gain made on the trade @$73.70. This was right near our secondary upside target of $75 too!!!
Here was the alert for the sell on the second half:
A nice controlled gain of nearly 12% inside 3 trading days and another great base hit for the Art of Trading short term trading portfolio!
We've traded the Art of Trading short term portfolio up nearly 39% YTD.
These are the trades that put is there:
I hope you found this review helpful!
Cheers and Happy Trading!
Art of Trading
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