Hess Corp. (HES) — HES stock fell nearly 70% in a year-and-a half-long bear market as oil prices cratered, before rebounding early this year. But with shares up more than 55% since mid-January and turning down from two major resistance lines, now appears to be a good time to short HES stock.
Hess is a large marketer of refined oil and gas products on the East Coast and has exploration and production facilities worldwide. When the company delivered fourth-quarter and full-year results in January, management said to expect a 5% to 10% reduction in the number of barrels of oil produced a day in 2016 and a more than 40% decline in capital expenditures.
Despite Hess reporting better-than-expected Q4 earnings, Capital IQ Equity Research, which rates HES stock a “Hold,” lowered its 12-month price target by $18 to $42. Its analysts also widened their 2016 per-share loss estimate by $1.84 to $5.77, and they expect a loss of $3.93 per share in 2017.
Turning to the chart, HES stock has been in a bear market since hitting a high of $104.50 on July 30, 2014. The downtrend line connects that high to several other recovery highs.
On Jan. 20, HES stock made a multiyear low at $32.41 before rebounding. It formed a bull channel on the bounce, but shares appear to have stalled at two major resistance lines — the bear market line from 2014 and the 200-day moving average. And a new sell signal from the MACD indicator was triggered last week.
HES stock looks like a good candidate for a quick short sale at $50 with a downside target of $42. If successful, this trade would deliver a return of 16%. A stop-loss order should be entered at $54 to protect against the possibility of theoretically unlimited losses in the event of a rally.
