Shares of Occidental mounted a huge rally after basing just below its 200 day moving average in March. Aided by a powerful breakout following its May 8th earnings report the stock extended its gain off the March bottom to 40%. OXY managed to put in a new monthly high in June but it was clear upside momentum had evaporated. Over the last three weeks the stock has been drifting lower while working off an extremely overbought MACD(moving average convergence/divergence indicator). On Monday OXY closed below its 50 day moving average for the first time since the April 9th breakout. A healthy pullback appears to be underway. When complete a very low risk entry opportunity will develop for patient bulls.
OXY left behind a major support zone following its huge May 9th breakout. This key area includes the stock’s January and April highs, the 2016 high and the 5/9 upside gap. Also near this level is the 1/3 retracement point of the entire 2018 range. This very solid support zone runs from $79.00 to $78.00. A dip down to this ares will provide a low risk entry opportunity. On the downside, a close back below $75.90 would violate the May lows sending a clear warning sign that a more prolonged bottoming process is ahead.
At time of publication we do not have a position in OXY.