In Jim Cramer's column on Real Money today he notes that there are plenty of stocks being run in the morning including Apache Corp. (APA) . Let's check out the charts of APA.
In this daily bar chart of APA, below, we can see how the price of APA was crushed from January to March. In March at the "throw away price" of $4, we can see a small double-bottom pattern. In April we can see prices tripled to around $12 and then traded sideways in May before resuming the rally this month. Prices gapped above the April high to establish an uptrend -- higher highs and higher lows. The slope of the 50-day moving average line turned positive last month but the slope of the slower-to-react 200-day moving average line is still negative but starting to bottom. The On-Balance-Volume (OBV) line has moved up sharply from early April to make new highs and tell us that buyers of APA have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator turned bullish at the end of April and looks like it is turning higher again for a fresh outright go-long signal.
In this weekly bar chart of APA, below, we can see that prices have been in a longer-term downtrend. APA has recovered but is still below the declining 40-week moving average line. Prices made a low in March but this is not a classic bottom formation. The trading volume has been extremely heavy and the weekly OBV line has been very strong. The MACD oscillator has just crossed to a cover-shorts buy signal.
In this daily Point and Figure chart of APA, below, we can see a potential upside price target in the $31 area.
Bottom line strategy: Our Point and Figure chart suggests more gains ahead. Traders should try to buy a dip below $16 if available. Risk a close below $12 while looking for gains to the low $30s.
