2 Oil Stocks Testing Key Fibonacci Levels

Cabot Oil and Tesoro are two oil stocks technical traders should keep an eye on

by Alex Eppstein

Published on Apr 17, 2017 at 2:37 PM
Updated on Jun 24, 2020 at 10:16 AM

Last week, Schaeffer's Senior Quantitative Analyst Rocky White took a look at the best stocks and worst stocks to own in the week following Easter. If you paid close attention to the two lists, you may have noticed that oil stocks were well-represented. Among them were Cabot Oil & Gas Corporation (NYSE:COG) and Tesoro Corporation (NYSE:TSO), which should be watched this week not only because of their post-Easter history, but also because they're trading near key Fibonacci retracement levels.

Post-Election Rally Has Cabot Stock Near Key Level

COG has gotten off to a good start this week, as history suggested it would. Over the past decade, the stock has been positive 90% of the time in the week after Easter, with an average gain of 3.3%.

This afternoon, the shares are up 0.8% at $24.20, and they've advanced nearly 21% since bottoming near $20 in early November -- prior to the U.S. presidential election. Note on the chart below that this bottom corresponded with the 23.6% Fibonacci retracement of COG stock's 2015-16 descent, and after staging a strong recovery, the shares now aren't too far from testing the 50% retracement level for the second time in three weeks.

cabot oil stock chart today

COG shares still have some buying power left on the sidelines, too, which could propel them north of the 50% level -- which roughly corresponds with the $25 quarter-century area. Specifically, after rising 23.8% in the last two reporting periods to 20.5 million shares, short interest accounts for close to 5% of Cabot Oil & Gas Corporation's float. In other words, short-covering activity could unlock additional gains on the stock.

Tesoro Stock Signals Another Leg Lower

TSO's post-Easter returns haven't been good in the past decade, and it's more of the same this time around. Historically, the stock has been positive 20% of the time over the previous 10 post-Easter weeks, averaging a loss of 3%. Today, the shares were last seen 1% lower at $78.98. Plus, the stock has slipped south of the 23.6% Fibonacci retracement of its 2015-16 sell-off -- which could signal sharper losses ahead. Already, since topping out in early December around $93, Tesoro stock has given up 15% of its value.

tesoro stock chart today

If TSO stock decisively breaches the aforementioned level, an unwinding of optimism could create more headwinds. For example, 75% of analysts rate the shares a "strong buy," without a single "sell" rating on the books. Not to mention, options traders have been extremely optimistic in recent weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Tesoro Corporation's 10-day call/put volume ratio is a top-heavy 3.72 -- just 6 percentage points from a 52-week peak.

A Schaeffer's 39th Anniversary Exclusive!

8 Top Stock Picks for 2020

Access your FREE insider report before it's too late!


  
 
 

Partnercenter