We liked the technical setup on Concho Resources Inc (CXO) when we looked at the charts in the middle of May. In fact we said, "Aggressive traders should approach CXO from the long side, risking a close below $125 for now. Add on strength above $140 and $145." Unfortunately, the strength we saw in the middle of May did not last and prices turned lower. I assume traders took their losses when prices closed below $125.
Since breaking $125, prices declined further, rebounded and then fell to a lower low this month. Let's review the charts again this morning and see if we can do better.
In this updated daily bar chart of CXO, below, we can see that prices have been making lower lows and lower highs for much of the past twelve months. Prices are below the declining 50-day moving average line as well as the declining 200-day line.
The On-Balance-Volume (OBV) line has been in a decline for the past twelve months. For twelve months the volume has been heavier on days when CXO has closed lower - this is a sign of aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line, or bearish, but it looks like it could be narrowing towards a cover-shorts buy signal.
In this weekly bar chart of CXO, above, we can see that prices are below the declining 40-week moving average line. Earlier in the year, prices were just below the flat average line. The current pattern is much weaker. The weekly OBV line is pointed down, telling us that on this timeframe (as well as the daily chart), sellers are more aggressive. The weekly MACD oscillator is in bearish territory and not getting closer to a cover-shorts signal.
In this Point and Figure chart of CXO, above, we can see a well developed pattern of distribution (many rally failures) and a bearish price target of $91.
Bottom line: The price of CXO is cheaper than it was in May, but the technical picture is weaker, in my opinion.