WPX Energy (WPX) is looking better on the charts, but it isn't out of the woods yet.
Like other names in the energy sector, shares of WPX have been under pressure the past 12 to 18 months. This chart, above, shows improving momentum in December, January and February. Prices have finally rallied above the 50-day moving average, but remain below the 200-day average. Prices are behaving better, but the On-Balance-Volume (OBV) is not (yet) showing us enough evidence of aggressive buying.
When I look at this longer-term chart of WPX, above, I think of the word "trying." Prices are still below the downward-sloping 40-week moving average, but it is trying to turn to the upside. The OBV line is trying to confirm a turnaround. Momentum shows three higher lows in the bottom panel. This is a long-term bullish divergence. Divergence is an interesting tool, as it tends to lead at turning points but there is not a strict relationship between a momentum divergence and a price reaction. The divergence says we are due for a move, but it doesn't mean it has to happen. This is different from other indicators where the signal and the result can be more direct.
We will continue to monitor WPX while it is trying to bottom.