We continue to see a race to the bottom in names such as Southwestern Energy (SWN), Chesapeake Energy (CHK), Cliff Natural Resources (CLF) and anything related to the coal industry. So while I continue to receive questions regarding when it might be worth rolling the dice on these shaky names, I would strongly suggest you save your money and look elsewhere.
So much healing is required before any of these stocks are worth considering, that we should just ignore them until they've stopped showing up on the new 52-week low list for at least three to six months.
If there were one beaten down energy stock I might consider trading (short term only), it's Cabot Oil & Gas (COG). The stock is currently near $15. And if you go back and look at the August 2011 through June 2012 time period, you'll see dip buyers routinely stepped in between $14.50 and $15. The current trend is unquestionably bearish. But signs of bearish excess (lower candlestick shadows) might be worth paying attention to for the aggressive short-term trader.
Setting aside the fact that it's nearly impossible to predict how markets will react to Wednesday's FOMC information, I didn't care for Tuesday's price action. Bulls were happy to hold the opening gaps, while bears will point to the lack of regular session follow-through. As for me, I have no edge in doing much of anything before the Fed makes their move. So I'll enjoy my time on the sidelines.
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