With high-flying tech stocks dazzling investors by their profit filled whoops and whirls, many other sectors are being relegated to the “why bother” bucket.
But don’t be too quick to count out the laggards. Opportunity still lurks in the beaten-down spots if you know where to look.
While scanning the energy sector this morning, the price chart of Chesapeake Energy Corporation (CHK) beckoned me. A few promising developments have cropped up suggesting a rebound may be in the offing.
Chesapeake stock’s seemingly relentless descent was halted abruptly last week by a massive rally. During the one-day surge CHK scored an epic intraday 20% reversal. The July 7 turnabout transpired on heavy volume, suggesting some serious institutional accumulation.
While one-day pops aren’t uncommon in a downtrend and often fail, the action in the days following the ascent have been very constructive, suggesting more upside may be in the offing.
First off, CHK has held onto its gains, giving back little ground over the past week (at least until today, when it shed another 6%). Still, the mild pullback has been relatively shallow and short-lived.
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Second, no major signs of distribution have materialized, so it should be easier for CHK stock to tack on more gains if the bulls want to push it here.
CHK Naked Put
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.
