Like other energy names we have discussed today, Action Alerts PLUS holding Occidental Petroleum (OXY) peaked last year and turned down below its 200-day moving average, but some big names making big bets and the improving technicals have caught our attention.
We have three interesting observations about this chart of OXY, above. First, departing from the trend in Exxon (XOM) and Chevron (CVX), OXY does not make a selling climax in late August, meaning there is no sharp move down with heavy volume in the charts.
Second, the price of OXY is not that far below the 200-day moving average, and a bullish crossover could come sooner than from other large-cap names.
Last, the On-Balance-Volume (OBV) line has been rising irregularly since late last year.
The math behind the OBV line is simple. If the security closes higher we add the day's volume. If we close lower, we subtract the volume figure.
Though there are dips in the OBV line of OXY, the up-slanting line still suggests that there has been more accumulation of OXY than distribution. A quick check at the Bloomberg terminal reveals that the likes of Wellington Management and Point72 Asset Management bought big positions this year, almost 13 million and 3 million shares, respectively, according to 13F filings from June 30.
In this shorter-term picture of OXY, above, we can see the same rise in the OBV line, but with daily data. We can see the strong rally above the 50-day moving average which has started to trend higher. We also see a bullish divergence between the lower lows in price and the higher lows from the momentum study in July and September. I won't be surprised if OXY soon sprints higher.