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Valero Energy Corp. (VLO) had a low of $27.89 in October, but has now just exceeded the September high of $34.35. The 127.2% Fibonacci target from the recent correction is at $36.16.

• The weekly starc+ band is at $36.55, with the 161.8% Fib target at $38.42.


• The monthly starc+ band is at $40.12.


• The weekly relative performance broke through its resistance, line a, last September indicating it was a market-leading stock.


• The RS line moved back above its WMA in early November.


• The weekly on-balance volume (OBV) completed a major bottom last summer as resistance at line c was overcome


• The OBV held well above its WMA on the recent correction and continues to look strong.


• There is initial support now at $33.80-$34.20 with the quarterly pivot at $32.97

Marathon Oil Corp. (MRO) was recommended at the same time as VLO as longs were established at an average price of $30.19 when MRO pulled back to $29.70 on November 8.

• MRO made new rally highs in late November at $31.95 before dropping back to a low of $29.73 on December 10.


• As MRO again turned higher, I recommended a stop at $29.62 just below support at line d.


• On Monday, the low was $29.60, hitting the stop.

For United Parcel Services (UPS), longs were established in early November at $72.17 (including commissions).

• The upside breakout in December surpassed the resistance at line e, in the $74.50 area.


• This was well above both the September and October highs.


• This made the prior December lows at $72.73 look like good support.


• The correction from the December 19 highs was clearly sharper than expected as Monday’s low at $72.58 hit the stop at $72.64. (Earlier, a $0.47 dividend was paid.)


• UPS opened Wednesday at $75.09 and closed on the highs.

What it Means: The stock index futures are a bit lower in early trading, and I would expect some consolidation or a pullback in the next few days. This should be a good buying opportunity.

In December, new positions were established in the Select Sector SPDR Consumer Discretionary (XLY) and positions were added in the Select Sector SPDR Financial (XLF) and Select Sector SPDR Health Care (XLV). Positions were also added in homebuilding (XHB) and retail (XRT).

The buy levels for the five stocks recommended in 5 More Stocks For Your Stocking were hit with only McDonald’s Corp. (MCD) being stopped out for a 2.6% loss. My stop at $87.22 was apparently too tight as the low was $86.81.

As I discussed in two articles last year, stop placement can be more of an art than a science and that is why I included Marathon Oil Corp. (MRO) and United Parcel Services (UPS), so that you can learn both when my stops work and when they don’t.

In hindsight, the stop in UPS was too tight, while I think my stop in MRO would have held in the majority of instances.

How to Profit: For Select Sector SPDR Materials (XLB), go 50% long at $38.06 and 50% at $37.72, with a stop at $35.86 (risk of approx. 5.3%).

For Valero Energy Corp. (VLO), on longs from $29.27, use a stop at $32.54. Though the chart looks strong and a rally to $38-$40 is possible, I would stick with my original plan and sell ½ at $35.98 for at 22.9% gain.

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