Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.
Linn Energy (NASDAQ:LINE) — This independent oil and natural gas development company’s properties are located in the United States, where it is taking advantage of the longer-term trend of increasing demand for natural gas.
Looking at a three year weekly chart, note the uptrend that started in late 2008. In early August, LINE stock again bounced right off that uptrend, confirming its strength — at least for the time being.
On the daily chart looking back to late 2010, the $36 level (blue line) served as support until early August, when due to severe volatility in the broader market, LINE dropped below $36 and just as quickly recaptured that level. Yesterday, the stock continued its wild ride and again closed below $36. Unlike the S&P 500, or even to the energy sector itself, however, we find that this stock is nowhere near its early August lows, and hence is holding up relatively better.
If and when LINE again recaptures the $36 level with more confidence, I would suspect it could outperform the broader market during an oversold bounce. Assuming an entry price near $36.50, one could place initial stops near $35 and with a profit target around $38.50.
- See Sam Collins’ Daily Market Outlook: Final High-Volume Sell-off May be in Order
- See Serge Berger’s Daily Market Outlook: Almost Time for a Bounce?
- See Sam Collins’ Trade of the Day: Silver Shows No Signs of Stopping
