I've been reviewing oil and gas stocks lately with a view for a long trade. Although there's some scepticism around recent international headlines of Russia/Saudi deals or whatever to stabilise supply, I take the view that the efforts being made are the early signs that a bottom is forming in oil, over coming months it will take shape and by the end of the year oil and gas stocks will be in recovery. Oil doesn't have to have a huge rally, just reverse and settle at modestly higher levels for a long trade to be profitable. ORG looks the best opportunity and just being patient for the right entry, plus waiting to exit some other trades to raise cash.
However, this post is mostly about a short play on Qantas. I've never traded it before and it wasn't even on a watchlist of about 60 stocks I periodically review. But I realised fundamentally it's the reverse of my oil interest. It's had a huge rally the past two years based presumably on falling oil cost and perhaps falling Aussie dollar. These tailwinds should now reverse. AUD I'm not sure about but just might not fall much further if US holds off interest rate rises.
Have look at the chart though. The monthly chart shows it starting to slow and congest under resistance and potentially rolling over.It's hit a long term horizontal resistance line of around $4.17 and the 61.8% fib retracement level of the main down range, both significant resistance.
The rising wedge bounded by pink lines is a distribution pattern. These normally fail about 70% of the way along. I haven't shown the weekly here, but the stock broke out to the downside last week, but then reversed up and went green. Not sure why, but results I think are due Monday 23rd Feb and this may be holding it up. Also some potential to spike up if positive announcement at results.
This should be a very good short opportunity. Just being cautious on an entry, but it could get confirmed as early as next week after results. Need to be wary of one final spike up. These is some technical argument for $4.95 to be the top. Less likely than current levels but possible.
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