Oil Stock Could Be Headed for More Trouble

A surprising number of analysts are holding out hope for CXO, however

Jul 8, 2020 at 2:09 PM
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It’s been a choppy descent for oil and gas name Concho Resources Inc (NYSE: CXO), which has been making lower highs since 2018. The shares just broke below former support at the 40-day moving average and are now contending with their 80-day moving average, which has provided both support and resistance in the past. All this pressure has put CXO at a 40% deficit for the year.

WKALT CXO Chart July 2

A surprising number of analysts are holding out hope for CXO, which could create some headwinds on the charts, should some of these brokerages begin to turn their back on the equity. Eighteen consider CXO a “buy” or better, while just four say “hold.” Plus, the consensus 12-month price target of $74.13 is a whopping 43% premium to current levels.

Optimism pervades the options pits too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CXO sports a 50-day call/put volume ratio of 2.42, which sits in the 75th percentile of its annual range. Adding to this, there’s plenty of open interest at the 55-strike call just ahead, which could act as major resistance in the coming weeks.

Short interest, meanwhile, is at its lowest level since 2018. The 6.08 million shares sold short make up just 3.1% of CXO’s available float, or less than three days of trading at its average pace. 

Subscribers to Schaeffer's Weekend Trader options recommendation service received this CXO commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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