Southwestern Energy (SWN) tripled off its December low, giving buyers a great Christmas present, but prices have made an interim peak and a retracement to $10 -- and maybe lower -- is playing out.
In this daily chart of SWN, above, we can see the December low at $5, the bounce to $10 and the retest of the $5 low in early March. This set the stage for a three-fold mark up to $15 by early June. Prices rallied above the 50-day and the 200-day moving averages in April, and a bullish golden cross was generated near the end of May.
The volume picture, however, has not fully supported the price gains. Volume increased in early March as prices turned up, but then it became "business as usual." The On-Balance-Volume (OBV) has moved up and down with the price action -- and is not showing a strong vote of confidence. Prices made a high in April and a higher high in June, but the momentum study made a lower higher. This different action is a bearish divergence -- prices making higher highs but momentum making a lower high. This bearish setup often foreshadows a price decline.
This three-year weekly chart of SWN, above, shows us the big 2014 to 2015 decline and the recovery advance. Prices have managed to rally above the 40-week moving average line, but the slope is still flat. The weekly OBV line shows only limited improvement.
The weekly Moving Average Convergence Divergence (MACD) oscillator did get above the zero line for a buy signal, but it is currently narrowing towards a new sell signal. With prices rolling over and weakening the past month, SWN has set a course lower. A retest of the 200-day moving average line at $10 is likely, and a deeper move below $10 is possible as the greenback firms and energy prices correct.