Concho Resources Inc. (CXO) was upgraded to a buy by theStreet.com's quantitative service today. Prices have improved from their late December nadir but from a technical perspective I think CXO needs more base building. Let's drill down into the charts and indicators.
In this daily bar chart of CXO, below, we can see that prices have yet to establish a new uptrend - a pattern of higher lows and higher highs. The volume pattern from the December low has yet to display increasing volume nor a strongly rising On-Balance-Volume (OBV) line. Both the shorter 50-day moving average line and the slower-to-react 200-day average line are pointed down. The Moving Average Convergence Divergence (MACD) oscillator has been hugging the zero line in recent weeks and thus not giving us a sign of trend strength.
In this weekly bar chart of CXO, below, we can see that prices are below the declining 40-week moving average line. The weekly OBV line is neutral and the MACD oscillator is below the zero line and just gave us a cover shorts buy signal.
In this Point and Figure chart of CXO, below, we can see that prices are in a downtrend, however, the software is projecting an upside price target near $148.
Bottom line strategy: CXO has made a low but not a bottom. Quantitative buy recommendations and fundamental buy recommendations are helpful, but I want to see investors vote by buying shares and sending the stock price higher.
