The time is NOW (DNOW). The National Oilwell Varco (NOV) spinoff, along with its previous parent, look ready to take this energy bounce to the next level -- a much longer level of recovery.
We've all seen the bounce in energy, but the change to the longer-term landscape of the charts may have escaped some who have only focused on the recent bounce saying, "too much, too quickly." And perhaps it is. But the view on the longer-term charts has changed to where pullbacks are opportunities to buy and some chasing may be in order, at least for starter positions.
Last week saw NOW put together a move nearly 10% to the upside. This was significant not only for size, but in terms of the price pattern. Since its spinoff, NOW has done almost nothing but move lower. This bearish channel has encompassed trading for the vast majority of the last year. This week's close was the first time the stock has managed to close above resistance since June 2014. Furthermore, there are now multiple support lines running beneath the current price, with the most obvious coming right around the $22 level. This is the ideal entry on a pullback, although even a retracement to $23 looks attractive.
There are other encouraging signs here in the secondary indicators as well. The vortex indicator has been bullish here for the past few weeks. But I would prefer to see this hold. Price isn't alone here, as we have confirmation in both the RSI and the Force Index. This is the first time we've seen the RSI push over the midline and this week is also the first time we see the Force Index pushing over zero. This is one of those times where are the pieces come together: trend, momentum, price and volume. Of course, this doesn't guarantee a move higher for over the next six months, but it certainly increases the probability and that's what we work with in trading.
The stars haven't quite aligned for NOV the same way they have for NOW, but they are close. The price pattern here is more rounded as opposed to the V bounce, but the pattern is still attractive. Price is running into long-term resistance going all the way back to September, so another week higher would be preferable here before taking a position. The secondary indicators here aren't quite where I would prefer them just yet. Again, another week of stronger price movement and we should see the RSI swing over the midline and the Force Index go green. Furthermore, we might see the Vortex Indicator swing back bullish.
In the end, there is potential with both names. But the offspring is more attractive than the parent at the moment.