Trade of the Day: Phillips 66 (PSX)

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We’ve opened a new bullish trade on Phillips 66 (PSX). Some of the strongest performance recently has been in the Basic Materials sector — thanks primarily to the rebound we have been seeing in oil prices. This turnaround in oil prices is good for oil producers and oil refiners, like Phillips 66.

Phillips 66 is in a fantastic position to benefit from a rise in oil and gasoline prices in its oil transportation and storage segment and its chemicals and refining segments. Higher oil prices will lead to higher production levels, which will increase demand for oil transportation and storage. At the same time, higher gasoline prices will allow the company to widen its margins by charging more for its refinery products. We’ve already seen the “crack spread” — the margin between the input cost of crude oil and the output value of the products created by the refining process — start to widen back out after contracting in August and September.

Wall Street seems to agree that Phillips 66 is in a strong position. Traders have pushed PSX’s stock price out of its recent consolidation range — confirming a bullish continuation pattern. We anticipate Phillips 66 will break above its recent high of $94.12 and move up toward our initial price target of $97.50.

‘Buy to open’ the PSX January 95 Calls (PSX160115C00095000) for a maximum price of $3.00.

Remember that U.S. markets are closed tomorrow, Nov. 26, to celebrate Thanksgiving, and will close early on Friday, Nov. 27, at 1 p.m. Eastern.

You can look forward to your next Trade of the Day on Friday, Nov. 27.

You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in our Advanced Technical Analysis Program.

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next SlingShot Trader trade and get 1 free month today by clicking here.


Article printed from InvestorPlace Media, https://investorplace.com/2015/11/trade-of-the-day-phillips-66-psx/.

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