When to Know Cimarex Bulls Have the Upper Hand

 | Feb 13, 2018 | 2:05 PM EST
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We last looked in on Cimarex Energy (XEC) in November, where we wrote, "XEC could trade sideways from here or just continue the upside from the July low. A close below $110 would cause me to rethink a bullish position on XEC." With hindsight we can see that XEC held the $110 level and proceeded to rally to a new high of $130 in January. After that new high prices fell quickly toward $95. With prices back down to the top of the June/July/August bottom pattern a fresh look at XEC is needed.

In this updated Japanese candlestick chart of Action Alerts PLUS holding XEC, below, we can see mixed technical clues. Looking at the price action we can see that the $100 area was acting as resistance in July and August so we are seeing a bit of role reversal as prices find some buying support in the same area. A long lower shadow on the candle chart tells us that buyers rejected the move below $100. Prices are below both the declining 50-day average line and the declining 200-day line.

The On-Balance-Volume (OBV) line did decline from early January but it remains above the June-August lows. The trend-following Moving Average Convergence Divergence (MACD) oscillator is in a sell mode below the zero line.

In this weekly bar chart of XEC, below, we can see that prices have declined toward the prior low. XEC is below the 40-week moving average line, which has just started to trend lower. The weekly OBV line only shows a five-week decline. The MACD oscillator just crossed to a take profits sell signal and is still above the zero line, for now.

In this Point and Figure chart of XEC, below, we can see that prices reached a downside price target of $97.57 and they are currently holding in a previous consolidation area.

Bottom line: With mixed technical signals I am willing to give XEC the benefit of the doubt but if prices push more than halfway through the support area or below $95, the bears will be gaining the upper hand.

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