Editor’s note: Serge Berger, the head trader and investment strategist for The Steady Trader, will be providing the Trade of the Day until Sam Collins returns on July 25.
With earnings season running wild, the debt ceiling to be decided on, and the fury of issues inEurope, this is not a favorable time for medium-term investors to buy stocks. But while the sidelines may be safer, it is worth pointing out some interesting charts in energy.
On a relative basis compared to the other sectors in the S&P 500 index, the energy sector is holding up well. The Energy Select Sector SPDR (NYSE:XLE) is fighting its way back up to its early July highs.
Anadarko Petroleum (NYSE:APC) is one of the largest independent players in the oil and natural gas exploration and production business. Before we look at the charts, it is important to note that the company’s earnings announcement is looming and currently scheduled to be released on July 25 after the close.
The weekly chart looking back four years shows that the stock is currently wrestling to overcome a resistance level near $81 that dates back to June 2008.
On the daily chart, the resistance level at $81 is clearly marked by the blue horizontal line. The sharp move up off the June lows had time to consolidate last week, and the stock now looks to push through the $81 level.
Given the earnings headwinds in the market now, I would not buy APC stock until we get a clear daily close above the $81 resistance zone. If and when it breaks above that level, stops can be set at $78 with an initial profit target at the April highs near $85.50.
