Bought +3 CVE.TO 10JUL17 Puts 30.00.MX @ 2.45, Mark $28.64

Update: Cenovus offers an explanation of why it tanked almost 5% today (Apr 22).

I doubled down on my short Cenovus Energy (CVE.TO) position this morning. The price of CVE.TO moved in my favour a day after my initial short entry. It then bounced back up strongly (about 2.5% rise in a day) yesterday to test $29.50. However, it has backed down since. The fact that it didn’t touch the $30 price level is a good sign. Crude Oil (CL on NYMEX) made a similar move. It tested the 50% Fibonacci resistance at 84.5 and backed down. This is again a good sign for my short as it signals the downtrend is a go.

Cenovus Energy Inc. (CVE.TO)

However, crude prices became very choppy in the afternoon today as shown in Figure 2. So perhaps there is still room to move up. I will keep an eye on the 84.50 and 85.50 resistances for crude and 29.50 and 30.00 for CVE.TO in the coming days.

Crude Oil

A couple of other signs that I watched on this addition to my short position.

1. this morning, the Bank of Canada gave strong hint that they will raise interest rate in June. However, USDCAD made a marginally new low briefly and then bounced back up above parity. This is bullish for USDCAD.
2. EnCana earnings topped estimates but the stock dived after the opening rush with at least 3 times morning volume as compared to the past five days. ECA.TO is hanging on to the 31.5 support level before noon but closed above it today. This is not a good sign for the energy sector on the TSX.

A confirmation with this down move would be a break of the recent low at $28 for CVE.TO and $82 for crude oil.

Related posts:

1. Bought +3 CVE.TO JUL 30 Puts @ 1.75, mark $30.10
2. Bought 4 MFC 10OCT Puts 17.00 @ $1.48, Mark $16.38
3. Bought 3 ABX 10OCT Puts 46.00 @ 4.00, Mark $44.67
4. Bought 3 PAA.TO 10DEC Puts 25.00 @ $2.27, Mark $24.75
5. Bought 3 CM.TO 10Oct Puts @ 5.00, Mark $74.02