I lost tons in VLO trying to ride the wave. But I noticed that in the 1 min & 5 min charts, it sells off quickly when the price reaches around $78. And it drops to around $77. On the daily 6 month chart, the wicks look much higher but if you look at the 1 min and 5 min charts, the wicks appear to be stop runs. So it is actually in between $78 and $77 with a bottoming around $76.30. Earnings is coming up on Oct 26 before market open. In addition, the market does not seem to want to go up anymore. It had rallied crazy for the last couple weeks because of the hurricanes, OPEC, and now winter. In the past, it doesn't go past $73.50'ish even in the dead of winter and with much better earnings than today. Example: Oct 28, 2015 earnings gave $2.79 on the earnings, Oct 25, 2016 gave $1.24 on earnings, and Jan 31, 2017 was $0.81.
Oil Futures /CL was $46.18 on Oct 28, 2015. $49.30 on Oct 25, 2016 and today (Oct 13, 2017) it is at $51.58. So the price of oil did go up but not by an enormous amount. The highest it went up was $55.24 on Jan 3, 2017 but even then, it closed at $52.47.
I think VLO will go down quite a bit after earnings on Oct 26, 2017. It doesn't appear to be doing better and besides, it's only better than its peers because of improved margin costs, not because of improved oil pricing.
Oct 13, 2017/Fri: Price broke through $78 and appears to be holding on the 1min chart. It does not appear to be holding on the daily 6 month chart. It looks tired on the daily chart. On the 1min chart, it looks like the tests of the $78 level is holding. I also added a stop loss but just in case, your trade is invalidated when price reaches $78.64.
I think I may have analysed this incorrectly. The general trend is up. At $78, it gets pushed back down. But the second time it gets pushed down, it's less forceful and recovered much faster. I think it will break $78 even though it doesn't deserve the price. I may need to buy instead of sell. I changed the stop loss to $78.40. If on Monday, it touches it, then it's going up and I'm wrong.
Oct 16, 2017/Mon: I added an alert for $78 price point just to warn me that my trade idea might be wrong. I also forgot to calculate my risk and reward ratios. I understand "edge" now. It's basically calculating risk/reward.
I'm risking 1,000 short shares of VLO at trade price of $77.3807. My loss cutoff is at $78.40. That translates to a max loss of $1.0193 x 1,000 shares = $1,019.30 + $20 commissions = $1,039.30. I expect the min profit at $76.75. That translates to $77.3807 - $76.75 = $0.6307 x 1,000 shares = $630.70 - $20 comm = $610.70.
Risk/Reward ratio is $610.70 / $1,039.30 = 0.5876R
This is not good enough. Next time, do better.
Oct 20/Fri: Very upset. My stop loss got run at open up to $78.44 (stop loss set at $78.40). So it was closed automatically at $78.