Diamondback Energy: This FANG Has Also Lost Its Bite

 | Jul 07, 2017 | 3:00 PM EDT
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Diamondback Energy (FANG) has been sliding to the downside the past two months or so and today's downgrade by TheStreet's Quant Ratings service looks like it could help precipitate another leg lower.

Continue to read on how the technical approach and the quantitative approach can work together to find opportunities and to avoid risks.

In this daily bar chart of FANG, below, we can see a six-month sideways period of trading from December through May. Prices are unable to make any upside progress but support continues to appear on dips under $100. Prices turn weaker in May as a bounce stops at $105 when previous upticks pushed higher and support below $100 melts. 

The slope of the 50-day moving average line gets more negative in May and in June the 50-day closes below the 200-day moving average line for a bearish dead cross. For most of the past year the On-Balance-Volume (OBV) line is declining telling us that sellers of FANG are more aggressive with heavier volume seen on down days. Momentum does improve in June but it may do little to generate a bounce.

In this weekly bar chart of FANG, below, we can see the clear break below the cresting 40-week moving average line. The weekly OBV line has declined the past two months signaling increase selling. The Moving Average Convergence Divergence (MACD) oscillator fell below the zero line last month for an outright sell signal.

Bottom line: The charts, indicators and quantitative appraisal are in agreement. I would look for FANG to work lower in the weeks ahead.

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