This Oil Stock Could Sink Even Lower

CRZO stock is staring up at key technical resistance

by Karee Venema

Published on Sep 13, 2018 at 2:06 PM

The shares of Carrizo Oil & Gas Inc (NASDAQ:CRZO) have been rallying up the charts in recent sessions, as oil prices surged ahead of Hurricane Florence's assault on the U.S. East Coast. However, news that the massive storm has been downgraded to a Category 2 has crude futures reversing course -- and CRZO stock down 1.5% at $23.85, retreating from a key trendline. If history is any guide, the oil name could be headed even lower.

Specifically, from last Friday's close at $22.94 to yesterday's intraday high of $24.70, CRZO stock surged 7.8%. What's more, this brought the shares within one standard deviation of their 40-day moving average. According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been six other times in the last three years the equity has rallied so close to this trendline after a lengthy stretch below it -- resulting in an average one-month loss of 4.46%, with 67% of those returns negative.

crzo stock daily chart sept 13

Supporting the short-term bearish case is the fact that CRZO's 40-day trendline currently corresponds to the quarter-century mark, which has contained the stock since an early August bear gap. What's more, this region is near the site of the equity's +20% year-to-date return.

The stock could see additional pressure, should shorts start ramping up their exposure again. Since hitting a near-term peak in early June, short interest has been cut in half to 8.92 million shares. Plus, the energy shares have been unable to capitalize on this steady buying power -- down 4.2% over this time frame -- pointing to underlying weakness.

There's plenty of room for downgrades to spark more selling, too. Of the 15 analysts covering Carrizo Oil & Gas, 11 maintain a "buy" or better rating, with not a single "sell" on the books. Additionally, the average 12-month price target of $33.46 stands at a hefty 40.3% premium to current trading levels.

Why Hanesbrands Stock Rebound Could Be a Head Fake
HBI's rally into a historically bearish trendline could mark a selling opportunity
Red Flags Waving on Fifth Third Before Earnings
FITB will report earnings bright and early Tuesday morning
Bull Signal Flashing for This Healthcare Stock
The blue chip is pulling back to a historically friendly trendline

a schaeffer's exclusive

2019 TOP STOCK PICKS

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


Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Moving Average Advice Any Trader Can Follow
How you can transform lagging indicators into leading indicators.
Tiffany Stock Pivots Higher Despite Weak Holiday Sales
Weak fourth-quarter guidance means a new record low for CASA
Trade Headlines Push Stocks Toward Another Positive Week
Positive news on U.S.-China relations helped stocks on Friday
The Moving Average Advice Any Trader Can Follow
How you can transform lagging indicators into leading indicators.