Concho Resources Inc. (CXO) was upgraded Monday to a "buy" by TheStreet's Quant Ratings service. As the teacher of technical analysis in a finance department filled with fundamentally and quantitatively oriented professors I find the combination of investment techniques more powerful.
In the daily bar chart of CXO, below, we can see a number of bullish technical signals. Prices have rallied in the past four weeks to close above the 50-day moving average line, above the slightly rising 200-day line and above the July highs to establish an uptrend from June.
The daily On-Balance-Volume (OBV) has strengthened the past two months telling us that buyers of CXO have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator gave an outright go long signal in the middle of September when it moves back above the zero line.
In the weekly bar chart of CXO, below, we can see that prices have doubled in the past three years. CXO is currently above the flat 40-week moving average line. The weekly OBV line has been in a longer-term decline but shows improvement in September.
The MACD oscillator crossed to a cover shorts buy signal and could soon move above the zero line for an outright go long signal.
In this Point and Figure chart of CXO, below, we can see that prices broke out over a double top and a $202 price target is being projected.
Bottom-line strategy: With the breakout over the July highs and the quantitative buy signal, traders should approach CXO from the long side risking below $140. A breakout over $165 will be very bullish.