Occidental Petroleum (OXY) — This is one of the largest oil and gas companies in the United States, and it also has global exploration and production facilities. However, because of recent divestitures, the pending spin-off of its California operations, built-in delay costs and possible regulatory problems, the stock looks overpriced.
The recent drop in the price of crude oil is another negative. S&P estimates 2014 earnings of $7.17 per share, down from $7.34 in 2013, and a decline to $6.79 in 2015.
On Sept. 15, with the stock at $97.10, I recommended a short sale saying, “Technically, OXY has broken its long-term support line and 50-day moving average with a high-volume gap. MACD confirms the breakdown.”
My downside target of $88 was hit Monday as crude oil futures fell 0.1% to $85.74 a barrel, a 22-month low.
If you shorted the stock, continue to hold but place a buy-stop order at $88. If OXY drops further, change the order to a trailing stop of 2 points. This strategy will protect your profits and potentially add to your gains.
Short selling is a speculative technique that is not suited for all investors. Check with your broker for their ability to borrow shares and any other special requirements.
