Energy names have been beaten up and roughed up the past year or so, but the chart of Conoco Phillips (COP) is telling us that the bears have taken things too far and the fourth quarter should see a much different story. Crude oil may or may not have seen its low for the calendar year, but the energy market is seeing some of the classic developments often seen at bottoms: layoffs, cut backs of projects, lower rig counts, and analysts making belated bearish forecasts. We have seen this play before.
In this chart above we can see COP cut in half like the pretty assistant in the magic show. Even though prices are on sale, notice the technical improvement in August and September, namely the rising Moving Average Convergence Divergence oscillator and the bullish divergence with the momentum indicator.
The long-term picture of COP adds to the positive fourth-quarter case.
Notice in this chart above that COP stops short of old support around $40 and one can see the approximate 50% retracement of the rally from the 2009 low to the 2014 peak. How much could COP rally by the end of the year? A rally back into the overhead resistance in the $60-$70 area would not be out of hand.