Apache (APA) was reviewed just a few weeks ago when it was upgraded by our quantitative service. In late January I wrote, "If you followed our advice from our last update (Aggressive traders could go long on strength above $47 looking for intermediate-term gains to the upper $50's. Risk a close below $42.), you should be long APA. My target is the $56 area for starters." This recommendation was certainly not my best work as APA quickly declined to $36. Ouch. How do prices look now?
In this daily bar chart of APA, below, we can see that what was looking like a decent bottom formation from August was just upset by the new lows this month. Last month prices were above the rising 50-day average line and now they are below the declining 50-day average. Volume has not increased significantly in recent weeks so I cannot say that sellers are being more aggressive. The On-Balance-Volume (OBV) line has declined since late January but it has not made a new low like prices have done. The slow stochastic indicator shows that prices are very oversold but that does not mean they can or should rally.
In this weekly bar chart of APA, below, we can see that prices are below the declining 40-week moving average line. The weekly OBV line has been flat the past three months which is not encouraging. In the lower panel, however, we can see that downside momentum has been weakening since March and is a large bullish divergence when compared to prices making lower lows.
In this Point and Figure chart of APA, below, we can see that prices made a new low for the move down. A longer-term downside price target of $24.01 is shown.
Bottom line -- the recent decline of APA to new lows is a negative and it can only be changed by price strength. A rally back above $44 is needed for me to change my mind.