EQT (EQT) might give back some of the gains from yesterday and this morning but I like the price action and the movement of the indicators in recent weeks. EQT should be put on your shopping list of energy names for a year-end rally.
In this 12-month daily chart of EQT, below, we can see the early bottom in December when many other securities did not bottom until January or February. Hint -- you should take notice of stocks that bottom first as they can be market leaders. From a July peak, EQT has been correcting lower. There are a number of positive things to point out about this four month correction. Number one is that is has been relatively shallow. In the two legs lower EQT has not declined all that much when compared to the prior six to seven months of gains. EQT closed below the 50-day and the 200-day moving averages but recent gains have taken EQT back above the 200-day line.
The On-Balance-Volume (OBV) line does decline in July signaling more aggressive selling of shares, but it then moves sideways and does not dip to a new low when priced dipped this month. I consider this a sign that selling dried up into the recent low. In the lower panel is the momentum study and there are no bullish nor bearish divergences.
In this three-year weekly chart of EQT, below, we get the 30,000-foot view. A long two-year decline followed by strength this year. EQT rallied above the 40-week moving average line and the slope of the line turned up. Last week and this week EQT has been trading under the 40-week average line but I think that will be a temporary situation.
The weekly OBV line is neutral and while the MACD oscillator has been negative it could soon cross to the upside as EQT rallies.
Bottom line: EQT might pull back to $65 one more time or not. I think a dip will be an opportunity to buy EQT with a close sell-stop. A close below $62.50 will tell me that the correction is not over. If EQT does not dip and continues to move higher I would just buy a close above $71 or a close above the 50-day moving average line. Prices in the $85-$90 zone could be seen sometime in second quarter of 2017.
