Shares of Whiting Petroleum (WLL) were punished by oil prices slipping due to a supply glut in the past 18 months or so, but the stock and oil prices made a recovery in recent months, and the price of WLL has more than tripled. Time to check on the progress and sustainability of the rally.
In this daily chart of WLL, above, we can see most of the decline of the stock price. The slide from above $90 in 2014 (not shown here) to nearly $3 reminded me of the crush of the financial stocks in 2008 as they deflated from lofty levels to single digits and needed reverse splits to move the stock price.
In late February, prices turned around and rallied above the 50-day simple moving average line. That line now has a positive slope. The On-Balance-Volume (OBV) line soared sharply, as buyers of WLL got very aggressive. But there are some technical clues now that need some discussion.
Prices have rallied to the 200-day moving average line and look like they have failed. This condition could change with a jiggle higher in crude or lower for the dollar index, but for now it has our attention.
Next, we want to point out the bearish divergence between the higher highs in price and the lower highs on the momentum study, telling us that the rate of advance in price has slowed. The next observation is anecdotal; I find that commentators on CNBC and the like have changed their tune to talk about higher oil prices/targets instead of lower ones.
In this longer-term weekly chart of WLL, above, we can see the long decline in the share price and the recent test of the declining 40-week moving average line.
Note the sharp rise in the OBV line on this timeframe, while the moving average convergence divergence (MACD) oscillator has only generated a cover shorts buy signal and remains below the zero line. WLL could continue its recovery, but recent longs might consider protecting their profits.