Todays Big Stock: EQT Corporation (NYSE: EQT)

EQT Corporation (formerly Equitable Resources, Inc.) is a company that conducts its business through multiple business divisions such as EQT Production, EQT Midstream and Distribution. EQT Production produces natural gas in the Appalachian Basin; EQT Midstream provides gathering, transmission and storage services to independent third parties in the Appalachian Basin. Distribution, through its regulated natural gas distribution subsidiary, Equitable Gas Company, distributes and sells natural gas to residential, commercial and industrial customers in southwestern Pennsylvania, West Virginia and eastern Kentucky. So, there’s a little bit about the company, now let’s look at the stock!

Please take a look at the 1 yr. chart of EQT (EQT Corporation) that I have shown below with my added notations:

EQT has formed a nice up-channel chart pattern over the last 5 months. A channel is simply formed through the combination of a trend line support that runs parallel to a trend line resistance.  When it comes to trend lines, I always tell my students that any (2) points can start a trend line, but a 3rd or more confirms it. You can see that EQT has (4) points of channel resistance (red) and (3) points of channel support (green).  Always remember that after the 2nd test of each of these trend lines, the market decided they were important trend lines, not me.  Following the EQT channel can provide you with both long and short trading opportunities.

The Tale of the Tape: EQT has formed a common pattern know as a channel, in this case, an up channel. A long opportunity could be entered on a pullback to the channel support, which at this point seems to be around $50. Short trades could be entered at channel resistance OR if EQT were to break below the channel support.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Todays Big Stock: Exxon Mobil (NYSE: XOM)

On Friday, Exxon Mobil’s Silvertip pipeline burst upstream from a refinery in Billings, Montana, where it delivered 40,000 barrels of oil a day. Up to 1,000 barrels, or 42,000 gallons, of crude oil flowed into the legendary Yellowstone River before the leak was stopped, according to Exxon Mobil estimates. The initial cleanup stages along the Yellowstone River are now being hampered as rising waters make it harder for Exxon Mobil to get to areas damaged by the crude spilled.

Twice in the last year regulators had warned Exxon Mobil of several safety violations along the Silvertip pipeline. The company decided to restart the line after examining its safety record and deciding it was safe. Then, the pipeline was temporarily shut down in May after officials in Laurel raised concerns that it could be at risk as the Yellowstone River started to rise.

Although Exxon’x recent spill wouldn’t appear to be anywhere near the catastrophe that the BP oil spill in the Gulf was, could the clean-up struggles and potential future liabilities create short-term volatility for Exxon’s stock? Please review the 1 yr. chart of XOM (Exxon Mobil Corp) below with my added notations:

The price to watch on any selling pressure would be the $80 level (blue). XOM usually finds support at $80 whenever above it. Whether XOM pulls back based on the recent oil spill news, or just because the stock has been on a nice short-term run already, $80 should provide formidable support. If not, and the $80 level were to break, XOM could see additional selling pressure.

The Tale of the Tape: Exxon Mobil has been in the news recently due to the rupture of its Silvertip pipeline. This news may have a short-term affect on the stock, XOM. The $80 level should provide support on any pullbacks, thus a long position could be entered. However, if the news were to get worse, and XOM were to break below the $80 support, a short position would be more advisable.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Todays Big Stock: Halliburton Company (NYSE: HAL)

Honestly, I really enjoy analyzing stock charts. The price movement of a stock can tell you so many things. Between important price levels, chart patterns, breakouts and breakdowns, there are just so many good trades to be made. However, you do have to wait and make the right trade. The right trade can be easily identified if you have the right . . . . chart!

So, please take a look at the 1-year chart of HAL (Halliburton Company) below with my added notations:

HAL has created a common chart pattern known as a Rectangle. A Rectangle pattern is simply formed when a stock gets stuck bouncing between a support and resistance. A minimum of two successful tests of the support and two successful tests of the resistance will give you the pattern. The great aspect of a Rectangle pattern is that it will provide you with clearly defined breakout and breakdown points. In the case of HAL, the Rectangle pattern has formed a $51 resistance (red) and a $45 support (green). If HAL were to break above $51, higher prices should result. On the flip side, if HAL were to break below $45, lower prices should follow.

Another useful tip with chart patterns is their ability to provide price targets. Simply take the height of the overall pattern and add or subtract that amount to or from the breakout or breakdown points to get the minimum price objective. For example, since the Rectangle pattern for HAL is $6 high, if HAL were to break above $51 a trader would expect HAL to climb to a minimum of $57. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.

The Tale of the Tape: HAL has formed a very common chart pattern know as a Rectangle. This pattern shows clear breakout and breakdown points for a potential long or short position. If HAL were to break above its $51 resistance, a trader could enter a long position in expectation of a run to $57. On the other side, if HAL were to turn lower and break below $45, a trade would want to enter a short position with an expected drop to $39.

Other potential trades: A long position on a pullback to the $45 support, or a short trade at its current resistance of $51. However, a stock near its 52-week high such as HAL might not be the highest probability short trade.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

Todays Big Stock: Monsanto (NYSE: MON)

From time to time I like to give readers a heads up on potential trading opportunities. Before considering any trades outlined in this newsletter, always remember that you must decide for yourself if you personally like the trade.

One key factor in making that decision will be to decide which side of the trade you believe gives you the highest probability of success. In other words, do you like the short side of the market, or do you like the long side? You don’t necessarily have “know” what side to be on, but it certainly helps to take a stance. So, if you haven’t thought about it, review the overall indices themselves. Take a look at the S&P 500 for example.  Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

The trading opportunity that I’d like to review today is that of MON (Monsanto Co).  Before discussing, please review the 1 yr. chart of MON that I have outlined below, with my added notations:

MON has formed two important levels over the last 6-7 months. The main level to watch is the level of $70 (dark green). As you can see, that level has been tested several times (circles) as both support and resistance. A lower level worth watching on any pullbacks would be $65 (light green).

MON’s earnings release yesterday was received well and the stock broke back above $70, which would have been an expected resistance. When a stock breaks through resistance, a trader will expect it to go higher. As a matter of fact, you can see that 2 out of the 3 times that MON has broken through $70 it has continued higher to at least $75 (blue).  Lastly, you may have already concluded that $75 would be the next level of resistance for MON.

The Tale of the Tape: MON has recently broken above a key area of resistance at $70. Because of this, MON should continue higher towards the next level of $75. A higher risk long position could be entered now, or a lower risk short position entered on a pullback down to the $70 level, if that occurs. Either way, a stop below $70 would be advised.

There are other potential trades on MON. If you cannot get in close enough to $70 to acquire the right risk/reward, a long position could also be entered on a break above $75. Also, a break back below $70 might be a great entry for a short position, in which case a potential long at $65 also comes into play.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

Todays Big Stock: UTi Worldwide Inc. (NasdaqGS: UTIW )

After my article on FedEx (FDX) last week, I received several emails inquiring about other stocks that may be in the same/similar industry as FedEx. Some traders were simply interested in lesser price stocks than FDX to potentially trade now, while others wanted to watch some of FedEx’s competitors going into their respective upcoming earnings releases. 

After doing a little research, I found (3) potential candidates that I thought were worth keeping an eye on both now and/or going into their earnings releases: UPS, EXPD, and UTIW. We have already analyzed UPS and EXPD, so today we will be looking at UTIW.

Below is a 1 yr. chart of UTIW (UTi Worlwide, Inc.) with my added notations:

Like EXPD, UTIW’s earnings do not come out for another couple of months, so this too is a stock worth making a trade on in the short term if you do not want to wait for the earnings release. UTIW is sandwiched between (2) important levels of $18 and $20.  Currently UTIW is testing the $20 resistance again.

The Tale of the Tape: FDX released its 4th quarter earnings report last week and UTIW is in the same industry. Like UPS and EXPD, UTIW is a lesser-priced alternative to FDX and to those interested, UTIW also has earnings coming up on September 1st. The level of $20 is being tested as resistance and $18 would be expected support if UTIW were to drop lower. Depending on your view and market position, a short position could be entered on a rally up to $20, while a long position could be entered on a break above the $20 level. On the flip side, a long position could also be entered on a pullback to $18 or a short position on a break down below $18.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT