This stock has doubled from its current price twice, and it’s ready to do it again.
In 2016 it doubled from $35 to $70.
In 2017 it ran from $40 to $75.
Now it’s at $45 and ready to run to… $75?
If you look at Andarko Petro’s (APC) chart closely you’ll see that it’s trading under its 50-day moving average. In fact, it’s been trading under the moving average since October of 2018.
However, despite the fact that it has only closed over the 50-day two times since October, the average has become flat to positively sloped. This positive slope indicates that once APC breaks the resistance of the moving average, it will have good positive momentum.
Another potentially bullish pattern is its early February sell off. This decline was a result of APC reporting disappointing earnings. A negative earnings announcement is not bullish, but the fact that APC did not make a new low and it has since moved higher suggests that the weak holders may be out of the stock.
When bad news doesn’t lead to a downtrend, then any good news is likely to have a very bullish impact.
In addition, the last month has traded in a very compressed range. This pattern of compression often precedes big moves. Since the $40 level represents multi-year support as mentioned above, today’s trade is to expect the breakout to be to the upside.
The trade is to enter on the range breakout, which is over $46.
Once APC breaks out there should be good support at $45 and $43.70. Stops under either level provide a good risk reward set up for a trade.
There is significant resistance at $50, $60 and then wherever the 200-day moving average is in between when the stock gets there. These are good targets for the short-term trader, but the longer-term trader may want to focus on the fact that APC will be coming off of multi-year low level so this could be a good long-term entry.
Rick Nartarian, Chief Investment Officer
Darwin Wealth Creation