Valero

Quote from michaelscott:

The Valero bounce I believe was fueled strictly by the price of oil. Look at the WTIC spot on stockcharts.com and give me your opinion of where oil might go. I say oil is at a turning point.

Valero was hitting 70 bucks when oil was over 70 dollars a barrel. Then oil came down and VLO fell off the cliff. Now oil is at 61 dollars a barrel and if it goes lower from here then what happens to VLO.

The chart is very bullish for VLO and has every indication of going higher.

However, Im not quite so sure about our friend the oil barrel. Im not sure of the consequences behind a large drop in the price of oil and how that will effect these energy plays. Last summer, the price fell off a cliff from 68 to 48 dollars.
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crack spread is 42 * gasoline - 1 * oil. Thats the VLO margin.

I think we're getting ready for another bull run in oil, merely on the basis of seasonality, no real diffusion of political tensions, and the fact that we're getting a little oversold.

y/y product demand and even storage #s aren't so bearish. only thing negative is the lack of buying for the strategic reserve at these price levels. Thats talk from the political front attempting to bring down the market. I think its all played out, and a hundred contracts a day (which is net purchases for the SPR avged out) isn't worthwhile enough on a fundamental basis to drive oil down $5.

Remember last shakeout to 49? thats what happens when a market is too long. On the other hand, the fact it came back so quickly to $68 tells me the fundamentals and real demand picture aren't so bearish.

Otherwise, we'd be at an anemic 45-53 right now. I'm buying oil here. We're just a month away from a hurricane fear driven market. Let the games begin.
 
"Call me wild and crazy, but I really like the JUN 70 Puts @ 1.40 for next week. I just don't see everyone continuing to chase prices on Monday, both in VLO and the Dow, S&P, etc. A 5% downside correction in VLO over the next several weeks would be perfectly healthy for a bullish overall stance."

Interesting viewpoint. I could see VLO possibly pulling in some from here, but buying 70 strike puts would worry me with the company supposedly buying back stock, and memorial day approaching. In addition another upgrade or a bullish gasoline report on wednesday might push VLO above 75 by the end of next week.

Do you think that VLO and the other refiner's prices are so connected to the price of crude oil, that a drop of 3 dollars or so will pull them down significantly, even if gasoline remains fairly bullish?

At my place of employment I am seeing the number of new online trading accounts being opened increasing dramatically. Many investors seem to be chasing this market (nobody wants to buy cheap stocks...they all like to buy at a premium). That alone may signal that it is time to sell, but I think that VLO may hit 80 before memorial day.
 
Quote from Trader7793:

"Call me wild and crazy, but I really like the JUN 70 Puts @ 1.40 for next week. I just don't see everyone continuing to chase prices on Monday, both in VLO and the Dow, S&P, etc. A 5% downside correction in VLO over the next several weeks would be perfectly healthy for a bullish overall stance."

Interesting viewpoint. I could see VLO possibly pulling in some from here, but buying 70 strike puts would worry me with the company supposedly buying back stock, and memorial day approaching. In addition another upgrade or a bullish gasoline report on wednesday might push VLO above 75 by the end of next week.

Do you think that VLO and the other refiner's prices are so connected to the price of crude oil, that a drop of 3 dollars or so will pull them down significantly, even if gasoline remains fairly bullish?

At my place of employment I am seeing the number of new online trading accounts being opened increasing dramatically. Many investors seem to be chasing this market (nobody wants to buy cheap stocks...they all like to buy at a premium). That alone may signal that it is time to sell, but I think that VLO may hit 80 before memorial day.
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cheap oil and expensive gasoline is great for VLO. They aren't a producer, so the cheaper the better.

If oil were only 30.00/bbl and gasoline were 1.50, VLO would make even more money than they make now. [33.00 crack spread]

Right now we are at 42*2.20 - 61.80 = 30.60.
 
Quote from stock_trad3r:

Stay away from VLO

Notice on the 1 year charge how Valero crapped out last september-october when the rest of the market was rallying?

http://chart.finance.yahoo.com/c/1y/v/vlo

What if that happens again? You are much safer buying stocks that trade with the markets.

VLO is too volitile. There are better investments.
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just know that refiners are a reflection of the crack spreads. they are an equity proxy to the below commodity spread. the charts are identical.

http://www.futuresource.com/quotes/...onthyear,time,last,chgoldsettle,open,high,low

http://www.futuresource.com/charts/charts.jsp?s=NRMK07&o=&a=W&z=610x300&d=medium&b=bar&st=

This last chart is best.

If imports of gasoline get back to last yr norms quickly, and demand calms down, this entire sector will be an incredible short.

Look how forward months (first link) are priced much lower.
 
"Stay away from VLO

Notice on the 1 year charge how Valero crapped out last september-october when the rest of the market was rallying?

http://chart.finance.yahoo.com/c/1y/v/vlo

What if that happens again? You are much safer buying stocks that trade with the markets.

VLO is too volitile. There are better investments."

Do you think that it crapped out because the summer driving season was definately over by that time?

I am just trying to make a decision as to if it has upside potential for the next couple of weeks, ahead of memorial day. Since I have June 65 calls, I do not really want to be long them after this months options expiration, but it might be smarter for me to take my profits now.
 
Valero was trading within a wide trend channel. In 2006, there was a head and shoulders within that channel causing it to tank down to the resistance.

Valero has now flipped through the resistance and that resistance will now act as a support. According to standard technical theory, the new price target will be the height of the old trend channel + the resistance.

20.44+68= 88.44

Keep in mind the following:

1) Valero has been traveling up and bouncing off the 10 day moving average since the start of the year.

2) Valero is traveling in the upper Bollinger channel.

3) The above is just a theorhetical target and may either not get there or blow right through there.

I would hold my position and only sell when the price violates the 10 day moving average and/or moves into the lower price channel. In the event of a volatility event, there will be time to sell so I wouldnt worry.

In the event of a market event that tanks the stock, the 68 dollar line will act as the emergency support. In looking at the chart, even severe market events have only been able to tank the stock by 5 points in one day. There will be time to sell in the event of a market event.

Set your stop for just under the 10 day moving average, say the 12-14 day moving average. That should be fine.
 

Attachments

Valero crapped out because of Goldman's index manipulations . They sold a lot of gasoline at the time, and collapsed the prices. VLO lost 30% on this move.
 
Quote from walter4:

Valero crapped out because of Goldman's index manipulations . They sold a lot of gasoline at the time, and collapsed the prices. VLO lost 30% on this move.
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tell me more what you know about this.
 
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