Ultra Petroleum (UPL), which is included in TheStreet's Stressed Out index of troubled stocks, has had some huge up and down moves over the past 15 years -- from pennies in 2002 to around $100 in 2008, and back again.
On the way up, UPL probably created a number of stock market millionaires. On the way down, I hope investors got out of the way. Can UPL turn around again?
In this chart of UPL, above, we can see the steady march or slide lower in the past 12 months. The 50-day and 200-day moving averages maintained negative slopes the entire time. Recently, the price of UPL has rallied up to the 50-day average line.
Notice the extreme oversold reading on the slow stochastic indicator (a measure of overbought or oversold) in February. Volume is also on the move for UPL. The heavy turnover and the strong rise of the On-Balance-Volume (OBV) line are telling us that buyers became very aggressive, with a lot of volume on days when UPL closed higher. This could be short covering and/or new buying (over 23 million shares sold short according to www.shortsqueeze.com).
This point and figure chart, above, only looks at price reversals of a given size and ignores volume. Small price moves, or "noise," is filtered out. This chart tells the story of the decline of UPL. Periods of consolidation followed by periods of sharp declines.
Prices have rebounded a bit, but we can see the previous area of consolidation in the $1.50 to $2.50 area. This price area is likely to act as resistance until prices can rally above it. A close above $2.50 will go a long way in making the chart more constructive.