Delek US Holdings, Inc. operates as an integrated downstream energy company that operates in petroleum refining, logistics, and convenience store retailing businesses. The company operates in three segments: Refining, Logistics, and Retail. The Refining segment owns and operates two refineries in Tyler, Texas, and El Dorado, Arkansas; and produces various petroleum-based products used in transportation and industrial markets. The Logistics segment gathers, transports, and stores crude oil, as well as markets, distributes, transports, and stores refined products. This segment serves oil companies, independent refiners and marketers, jobbers, distributors, utility and transportation companies, and independent retail fuel operators. The Retail segment markets gasoline, diesel, and other refined petroleum products, as well as convenience merchandise.
Delek’s stock is forming a head and shoulders (H&S) pattern. Please take a look at the 1-year chart of DK (Delek US Holdings, Inc) below with my added notations:
DK finally broke out through its $27 resistance area in January and rallied higher as expected. Over the last (3) months the stock has created a very important level at $35 (navy), which is also the “neckline” support for DK’s H&S pattern. Above the neckline you will notice the H&S pattern itself (blue). Confirmation of the H&S would occur if the stock broke below its $35 support. If DK breaks that level, the stock should move lower from there.
The Tale of the Tape: DK seems to have formed a head & shoulders pattern. Although a trader could go long at $35 expecting a bounce, the stock’s pattern implies an eventual breakdown. If that happens, a short trade should be entered on a break of the $35 level.
Would you like assistance in making your TBS trades? If so, email me at Christian@yolopub.com and let’s talk about working together one on one!
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT