The "CRACK SPREAD" is the difference between the Brent Crude price ( World ) and the WTIC price ( Domestic ). US refiners take domestic crude, refine it into value added components, and then sell those products world wide. The crack spread is a good proxy for the ability of refiners to make healthy margins on their refined products.
After bottoming out in Jan 2016, the spread was steadily increasing until Jan 2018 when there was a swift pull back. That spread is now quickly moving to the upside toward the January highs. All the Refiners have been ripping.. Here are the key names to keep on your watchlist. $ANDV $PSX $VLO $HFC $PBF $MPC
Allegheny Technologies ( $ATI ) has been lagging its peers in the steel group. You can see in the bottom panel of the daily chart that $DJUSST, the Steel industry group, is outperforming SPY. Meanwhile $ATI has been pinned under $18.50 since August.
I am watching $ATI closely here. When I look at the weekly chart below, what catches my eye is both the bullish ascending triangle with price pressing towards $19 and the big volume / price air pocket between $19 and $26. If price were able to punch through $18.50 - $19, I think you'd see a quick run to $26 with nothing in the way.
Use both the daily and weekly chart in conjuction with one another. Alarm above $18.50 on the daily for a head's up on the move. That is your first trigger, Then, look for the weekly to close above $19. That is the final trigger to get long. I'd use $18.50 on the weekly as a stop loss. If the weekly closes below $18.50, kill the trade; It would be a failed breakout.
My first target is $26 on the weekly chart. Let's see how price behaves over the next week or so. Hopefully the set up pans out, but be patient and wait for it. Set your alarms so you dont miss the move.
Happy Hunting and Good Trading
DAILY CHART BELOW
WEEKLY CHART BELOW
Bed Bath and Beyond has been consolidating above $41 on the weekly chart since it tagged its low back in February. It lost that key support today, closing at $40.42. I really like the idea of buying puts on $BBBY for the following reasons. Key Support failed after a long consolidation; the stock is in a weak group and is under performing those weak peers ( bottom panels ); and it is also under performing SPY ( Top Panel ). I also like the set up because there is a clear line in the sand close by to shoot against as a tight stop.
The Trade: I like either the Nov 40P at 1.12 midpoint or the Jan 40P at $2.21 midpoint. I think the stop should be $41.50 - $41.75 on a weekly closing basis. If it closes back above resistance, take the trade off.
Disc: I am not in the trade at this time but plan to be on Oct 18.
Scott's had an epic run off the June lows and topped out in the low $80's. The swift run up has left the stock vulnerable to a sharp pull back. Notice the volume / price air pocket from $79 to $74 where little support exists. Price currently sits on its daily pivot point and on gap support. Should price fall from here, I'd expect a swift rug pull to the mid $70's. Alarm $79 for a head's up that support has failed. Target October expiration with October 80 Puts . The October chain is thinly traded so use limit orders. Aim to take profits in the $75 to $74 area for a quick hit n run. This has been a strong stock and a fan favorite so this is purely a technical short set up if support does fail.