Slipping EOG Resources Likely Needs to Build a New Base

 | Aug 04, 2017 | 9:39 AM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

eog

EOG Resources Inc. (EOG) got hit with a number of body blows (ouch) right after I thought it looked attractive to buy on weakness. (EOG Resources and other independent oil producers are the subject of Jim Cramer's opening story this morning.)

As I wrote at the time: "After a seven-month decline, EOG has broken its downtrend and is trying to restart the bull trend. Prices have improved, but I would like to see more volume and a more bullish OBV line before committing to the long side. A pullback to $92, should it occur, is probably a buying opportunity risking below $88."

In just two days EOG pulled back (slumped would be a better description) to $92 and continued lower to $88 -- almost a losing day-trade. Depressing. What do the charts and indicators suggest now is a good strategy? Let's check.

In this updated daily bar chart of EOG, above, we can see how the flat 200-day moving average line acted as a ceiling last week. Prices made a small gap to the downside the other day and broke the flat to slightly rising 50-day moving average line. Prices did not close on their lows yesterday (Thursday), but they closed weak. The daily On-Balance-Volume (OBV) line now shows a fresh decline and tells us that sellers of EOG have been aggressive. The Moving Average Convergence Divergence (MACD) oscillator in the lower panel has crossed to a "take profits sell signal." What profits, you ask?

In this weekly bar chart of EOG, above, we can see how prices stopped at the underside of the flat to declining 40-week moving average line. The weekly OBV line needs today's input, but it looks like it will turn lower. The weekly MACD oscillator in the lower panel looks like a cover-shorts signal will be reversed.

In this Point and Figure chart of EOG, above, we can see how prices have weakened in this month so far. See the "8" on the chart and the column of "O's"? This chart only shows limited support at $87.32 and $86.45. A possible downside price target of $79.97 is projected.

Bottom line: EOG may hold its June lows but the recent rapid sell-off suggests the low could break. Whether EOG declines to its Point and Figure target is not important. What matters now is that EOG probably will need a long period of new base building.

Columnist Conversations

Foot Locker's (FL) less than expected quarterly earnings set off a round of selling the entire athletic appare...
View Chart »  View in New Window » Gold has met the first upside target off the last setup zon...
View Chart »  View in New Window »
View Chart »  View in New Window »

BEST IDEAS

REAL MONEY'S BEST IDEAS

News Breaks

Powered by

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.