Oil Stock Teetering on Support
04/28/2011 8:00 am EST
Shares of this oil company are trading very close to strong support, allowing savvy traders to find a favorable entry point in advance of an upcoming move higher.
Tesoro Corp. (TSO), the oil refiner and retailer of petroleum products, has posted two down candles and has pulled back into strong support at the 50-day simple moving average (SMA).
After three “doji-type” candles, which traders often see as a sign that a short-term reversal, it appears that reversal has happened, even if already completed in only two and a half points.
Fundamentally, with colleagues in the oil industry reporting record earnings, TSO will benefit from that news as well as its own profits. Furthermore, as we sit at the beginning of summer, when demand for oil and petroleum products increase, TSO will see a continuation of its upward trend.
This quick pullback will be a good opportunity to buy in as long as there is no significant break of the 50-day moving average. A trailing stop should be initiated just below the 50-day moving average.
By Tim Bourquin, managing editor, MoneyShow.comAn Oil Spread Trade That’s Pretty Slick