The current juncture in the markets, with earnings season running wild, the debt ceiling to be decided on, and the fury of issues in Europe don’t make it very favorable to buy stocks for medium-term investors in my opinion. And while the sidelines may be a safer place to sit, it is worth pointing out some interesting charts in energy.
The energy sector SPDR Energy Select Index (ARCA: xle) if we look at it on a relative basis compared to the other sectors in the S&P 500 index is holding up well and fighting its way back up to the early July highs.
Anadarko (NYSE: APC) is in the business of oil and natural gas exploration and production and as such is one of the largest independent players in the 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 25th after the close of regular trading.
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 for 2011 so far 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 as the stock now looks to push through the $81 level.
Given the earnings headwinds in the market now I would not buy this 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 and an initial profit target at the April highs near $85.50.