Trading COG - Cabot Oil and Gas Corp Off Oil Inventory Numbers

It’s been crazy trading in some of the commodities the past couple of days. I’ve mentioned it before, but one economic number I pay attention to comes out on Wednesday mornings. The oil inventory number is announced an hour after the stock market opens. You really shouldn’t be concerned if the number is up, down, or flat. What you want to see is some action in the oil stocks. Don’t try and analyze the number. Let the patterns you trade emerge out of the expected volatility. That’s how I approached it yesterday, and here’s how I played COG - Cabot Oil and Gas Corp. off of the number.

Notice the daily chart has a tradeable pullback pattern, so it’s on my watch list, as COG has had excellent relative strength.

As soon as the inventory number was announced, I watched for direction. The OIH - Oil Service Holdrs were moving up. COG had a reward/risk pattern I couldn’t pass up. My stop was placed below the low of the day. It took me a few seconds to make my decision, and fill the trade. R = .12 when bought. I exited a quick 1/2 of the shares probably too fast on that 3rd green bar higher. The rest were sold for a point.

Notice the buy signal on the first pullback. So what’s important about this? The oil inventory numbers acted as the catalyst to get the stocks like Cabot moving. Find a few catalysts in the stock market, and you’ll find a few trades.