Apache Suddenly Begs the Question, 'How Low Can You Go?'

 | Aug 04, 2017 | 8:25 AM EDT
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Apache Corp. (APA) slumped to new lows for the long move down yesterday. (Apache and other independent oil producers are the subject of Jim Cramer's opening story this morning.) We recently looked at the charts and indicators for APA and came away with a bullish story: "Bottom line -- aggressive traders could go long on a close above $50 risking below $46. A quick rally to $56 is possible."

Prices stopped short of $52 and then quickly reversed to break below the flat 50-day moving average line, stopping us out and breaking the June/July lows. Prices have not been this low since early 2016. No doubt I will be getting some nasty anonymous emails this morning. Hey, the stock looked attractive fundamentally and technically, so how could I lose money? Not to be flip or insensitive, but no investment approach is perfect and the mirror side of reward is risk. Consummate investors learn to take small losses and move on.

So how do the charts and indicators look like this morning? Let's check.

In this updated daily bar chart of APA, above, we can see how fast and hard the stock fell (big range day and heavy volume). The moving averages are pointed down, the On-Balance-Volume (OBV) line stopped its rise from June and turned down and the Moving Average Convergence Divergence (MACD) oscillator looks like it, too, has crossed down again.

In this weekly bar chart of APA, above, we can see the new low for the move down. The slope of the 40-week moving average is still bearish. The weekly OBV line remains flat but could turn down with today's close. The weekly MACD oscillator looked like it was going to cross to a cover-shorts signal but now looks like it will stay bearish. There is a band of potential support from late 2015 in the $40-$35 area.

In this updated Point and Figure chart, above, we can see the recent decline as part of a long column of O's. This chart projects a downside target now of $36.50.

Bottom line: Personally and professionally, one always feels better when a forecast works out, but dealing with losses is part of the process. The $46-$50 area is likely to become resistance now and it remains to be seen if the $40-$35 area will become support.

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