Energy Transfer Partners, L.P. (ETP) has made new lows for the move down this week, but the pace of the decline is slowing. While we still have lower price targets, the selloff is long in the tooth and farsighted investors might begin checking out the long side.
Let's drill into the latest charts and indicators this morning. Back in early April, I thought that ETP, "looks like it will be stuck in neutral for the intermediate term." May and June brought renewed selling, and things have continued into August.
In this daily bar chart of ETP, above, we can see that the down drafts for this stock have lasted longer than the counter-trend rallies. The rebound that started back in December lasted two and a half months, but the rally from mid-June ended by early August. This is a sign that the sellers of ETP are more aggressive.
Prices are below the declining 50-day moving average line as well as the declining 200-day line. The On-Balance-Volume (OBV) line showed accumulation, or buying, from December to February, but it has weakened since. A declining OBV line signals more aggressive selling, with heavier volume being transacted on days when ETP closes lower.
In the lower panel is the 12-day momentum study. Today's price is compared to the price 12 days ago. This leading indicator shows a bullish divergence from June to August. Prices made lower lows, but momentum made a higher low, telling us that the pace of the decline slowed. Last, the heavier volume seen this month could exhaustion selling, or "throw-in-the-towel selling."
In this weekly bar chart of ETP, above, we can see that prices are below the declining 40-week moving average line. There is some support in the $20-$15 area from January 2016. The weekly OBV line has been in a downtrend for much of the past three years. The weekly Moving Average Convergence Divergence (MACD) oscillator has been in a bearish mode since last November.
In this Point and Figure chart, above, we can see the downtrend and we have added the volume at price indicator (left side of the chart). There was only a small amount of volume traded last time prices were down around $18. There was a lot of volume traded in the $19-$21 area. The chart also shows a $16.27 downside price target, or objective.
Bottom line: a 12% yield on ETP is probably tempting, but it wouldn't hurt to see the chart bottom first. Heavy volume and slowing momentum are signs that a turnaround could be in the making but I want to see a higher low on the daily chart before probing the long side.