Oil is headed lower from here. The Canadian dollar is also showing tremendous weakness and only making the case stronger that oil is breaking down. With that said, energy stocks are going to follow. I've been following XLE and ERX for 5 years. This is a tremendous opportunity to stay short, but also prepare to go long when the time comes.
Trade active
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Entry 3 is active. 15% of capital is invested. I believe there is still downside risk. ERX could reach $7.75 per share if oil trades at $20.
*Decided against taking the trade at 29 for ERX. Took the trade at 23 but took profits. Thus, I am net profitable in this position/strategy thus far.
Trade closed manually
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Stop reached on ERX. I said I would hold - no longer doing that. Next stop for ERX is $7.75 per share. This is based on my assumption that its inverse derivate ERY is headed for $55, which implies 7.75 for ERX, and $45 for XLE. I am expecting oil to reach somewhere between $16 per ounce - $22 per ounce in order to reach these levels for ERX/XLE/ERY.