All day I scan the charts looking for technical patterns to trade. My Trending 123 Pattern Scan powered by Recognia is one useful tool I have to scan the markets quickly, and it is showing two polar opposite technical events for these two energy stocks.
Buy the Continuation Diamond
Click to EnlargeOasis Petroleum (OAS) is an oil and natural gas exploration and production company focusing on Minnesota and North Dakota. Its stock has developed a continuation diamond over the past 82 days.
The price has broken upward out of a consolidation period, suggesting a continuation of the prior uptrend. The pattern begins during a downtrend as prices create higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. When the price breaks upward out of the diamond’s boundary lines, it marks the resumption of the prior uptrend.
Recommendation: Buy OAS for a $46.00 – $47.75 target in the intermediate-term (six weeks to nine months) .
Short the Bearish Flag
Click to Enlarge Piedmont Natural Gas Company (PNY) is a natural gas distributor in Tennessee, North Carolina and South Carolina–and its stock has developed a short-term bearish flag over the past five days.
The price seems to be resuming a sharp decline after taking a brief pause. A bearish flag pattern occurs during a dynamic market decline, representing a brief pause as the market “catches its breath” before running off again in the same direction. The pattern consists of two parallel trend lines, often sloping upward against the prevailing downtrend, and is confirmed when the price breaks down through the lower boundary to resume the decline.
Recommendation: Short PNY for a $31.90 – $32.20 target in the short-term (two to six weeks).
InvestorPlace advisor John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the Open, Parabolic Options and Trending123. Trending123 members receive access to the Trending123 Pattern Scan powered by Recognia free as part of their membership. For more information on which service is for you click here.