Time for an Energy Turnaround?

 | Aug 18, 2014 | 3:18 PM EDT  | Comments
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Stock quotes in this article:

rrc

,

ba

Has oil come down enough? All week I am going to be looking at some of the hardest-hit oil stocks trying to figure out which have the bad news baked in and which still have further to fall.

Take one look at the chart of tonight's big focus Range Resources (RRC) and you might be tempted to say this is the level to short it. The stock has a classic head-and- shoulders pattern and given its leverage to natural gas, which has been hammered here, it seems like one of the bigger shorts in this market.

But one thing this market has taught us, as I mentioned earlier when I looked at Boeing (BA), you often have to take the other side of the chart and the other side of the earnings break. A stock that has gone down to $74 from $94 in a straight line with some of the best acreage in the country and a declining drilling cost might be an opportunity ahead of what could be a very cold winter.

I know that it seems preposterous to get ahead of this runaway freight train, but didn't you have to do that for the airlines, for the aircraft manufacturers and for the retailers and, earlier than that, for the biotechs and the Internets?

I can't predict a rapid turnaround to the group. But oil is making a stand here at the $95-$96 level, where Carley Garner said it could hold on a chart basis and Dan Dicker agrees on a fundamental call. If oil stops going on, then you want to take a good look at any company in the complex, including this one.

The group's been the worst performer, not unlike how the Internets were, or the biotechs or the airlines.

They all made their stands and their turns. Could oil be next?

Range and the others I am profiling this week could let us know. 

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