We reviewed Action Alerts PLUS holding Cimarex Energy (XEC) in mid-September, noting that, "XEC is slowly improving. More sideways price action is likely and maybe even another test of the July or August lows."
With hindsight, we can see XEC has behaved stronger than we anticipated, rallying the balance of September before trading sideways for October.
Our latest Point and Figure chart of XEC (third chart below) is indicating a possible price target of $136, so a review of the latest charts and indicators is a good idea so we do not underestimate XEC again.
In this daily bar chart of XEC, below, we can see prices are above the rising 50-day moving average line as well as above the still-declining 200-day line. The 50-day average could close above the 200-day line in the next few days, generating what is commonly called a "golden cross." This typically happens well off the actual low or bottom and is obviously a lagging indicator.
The chart below also shows a rising On-Balance-Volume (OBV) line from mid-August, telling us that buyers of XEC have turned more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator is poised to cross to the upside for an outright go-long signal.
In this weekly bar chart of XEC, below, we can see prices are above the 40-week moving average line, but the slope of the line is still pointed down. The weekly OBV line has improved the past four months and supports the rally. The MACD oscillator on this weekly timeframe crossed to the upside from below the zero line for a cover-shorts buy signal in early September.
In this Point and Figure chart of XEC, below, we can see a recent upside breakout and a possible/tentative upside price target of $136.33.
Bottom line: It looks like XEC has started a new leg higher. Traders should approach from the long side, risking a close below $110. On the upside, a rally into the $135-$140 area is possible.