Pending Bearish Action For ConocoPhillips
Published April 16, 2017
On April 13, 2017, ConocoPhillips (COP) crossed below its 100 day moving average (DMA). Historically this has occurred 243 times and the stock does not always drop. It has a median loss of 3.997% and a maximum loss of 38.519% over the next 15 trading days.
When we take a look at other technical indicators, the relative strength index (RSI) is at 53.0188. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. The current reading declares the stock is relatively neutral, but has been heading down.
The true strength index (TSI) is currently 6.1713. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The current reading declares the stock is moving up, but could be skewed due to the delay of this indicator and the recent gap up on March 30.
The positive vortex indicator (VI) is at 1.0926 while the negative is at 0.8497. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The current reading declares the stock has been moving up, but the pace it has begun to slightly move down.
The stochastic oscillator K value is 58.6028 and D value is 79.8259. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the price action is trending up. When the D value is higher that the K value, price action is trending down. The current reading declares the stock is exiting overbought territory. This indicates the stock will begin to fall soon.
Considering the moving average crossover, RSI, TSI, VI and stochastic levels, the overall direction appears to continue heading down. Based on historical movement compared to current levels and the current position, the stock could drop another 3.74% over the next 15 trading days.
The stock recently gapped up and may begin to close this gap which would require a decline to the 46 level. The first challenge is a strong break below 48.61. When this happens, a stronger decline should follow. When the stock was trending down and gapped up on a non-earnings related event, it has always closed that gap. The key is how long it takes to close the gap. A similar gap up occurred in November 2005, January 2006, November 2010, and December 2011. It took 9, 16, 19, and 11 trading days for the stock to drop down and close the respective gaps.
DISCLOSURE: I currently do not have positions in the stock mentioned above. I most likely will not enter a position within the next 72 hours. Historical movements and technical indicators should never be the sole basis for entering positions involving risk. Make sure appropriate research is conducted prior to taking any risk in a marketplace.