Chesapeake Energy (CHK)
Click to Enlarge Having emerged from the chaos that embroiled Chesapeake Energy stock through 2012, this oil and gas company is emerging as a relative strength leader worthy of the bulls’ attention.
CHK recently broke through the technically important $25 level — a move that garnered the attention of short sellers as we’ve seen short interest rise, indicating the bears are trying to call a top.
The problem with the shorts’ strategy is that the break above this price has also attracted technical buyers, as the stock has now returned better than 20% during the past three months. We could see a slight pullback to the $26 level, but expect to see technical support that will lead the stock higher, causing those shorts to throw in the towel and spark a short squeeze.