We have not looked at Cabot Oil & Gas Co. (COG) since late February, and at the time we had a hard time deciding on where prices might travel.
"I feel like I need to be the Oracle of Delphi and give advice that could be taken as bullish or bearish," we wrote at the time. "If COG holds and does not trade down to $21 I can be modestly encouraged, but it will take strength above $25 to get me more excited about COG."
With 20/20 hindsight we can see that COG declined to around $21.50 in early June, stopping short of the $21 level and giving us some encouragement. This month COG has spent enough time above $25 to make me more positive on the stock.
In this updated bar chart of COG, above, we can see the price improvement in the stock since early June. An uptrend is in place as prices have made higher lows and higher highs. The slope of the 50-day moving average line has turned positive, while the 200-day moving average line has turned to flat from down.
The daily On-Balance-Volume (OBV) line is giving us positive signals as it bottomed in May and June and has worked higher in July, telling us that buyers of COG have become more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in late June for an outright go-long signal. A fresh go-long signal could develop in the next few days as the two averages of this oscillator are poised to cross to the upside.
In this updated weekly vertical bar chart of COG, above, we can see that the price of COG is above the now-rising 40-week moving average line. The weekly OBV line has been rising since March, which suggests a fair amount of accumulation. The weekly MACD oscillator turned up above the zero line in June for an outright buy signal on this time frame.
In this Point and Figure chart of COG, above, we can see a recent upside breakout at $25.93. This small double-top breakout yields a nearby price target of $26.72, but that may be a conservative objective.
Bottom line: COG looks strong enough now to recommend the long side. Traders could use a sell stop below $24.25. My upside price targets are $26.75, followed by the $28-$30 area.
