Rough Week for LEAPS
The $9 drop in oil prices crushed several existing plays and hit our stops on PBR, PDE, NE and NOV. However that same crushing drop also gave us entries in SD, MOS, FLR, ANR and TS. Several of those at significant discounts to the numbers we saw just a couple weeks ago.
The drop in oil to $135.15 was exactly to strong support at the 30-day average and also uptrend support since March. This is exactly where I would look to buy oil as an investor on the sidelines. If you are not in a specific position today I would look at this as an opportunity to buy the dip.
This would also be a good opportunity for a short-term trade on the USO. The USO closed at $110 with risk to $107. The upside is over $116. We may not retest the highs but a return to $140 oil is very likely and that could mean a $4 move in the USO.
On those four stocks we lost this week, PDE, PBR, NE and NOV I would not hesitate to jump back into those positions at this level. Petrobras especially after it rebounded to close at support on the 100-day average.