Continental Resources, Inc. is an independent crude oil and natural gas exploration and production company with operations in the North, South and East regions of the United States. As of December 31, 2010, approximately 70% of its estimated proved reserves were located in the North region. It focuses its exploration activities in new or developing plays that provide the company the opportunity to acquire undeveloped acreage positions for future drilling operations. As of year-end 2010, its estimated proved reserves were 364.7 million barrels of crude oil equivalent, with estimated proved developed reserves of 140.4, or 38% of its total estimated proved reserves.
To analyze Continental Resources’ stock for potential trading opportunities, please take a look at the 1-year chart of CLR (Continental Resources, Inc) below with my added notations:
CLR has several different levels to focus on. First, the $50 level (green) has been an important level for CLR over the entire year and is currently acting as support. Next, the $60 area (blue) has always acted as support/resistance since December of last year. Lastly, CLR has created a potential short-term, down trending resistance level (red), which the stock is getting closer to hitting again.
The Tale of the Tape: There are several trading opportunities available on CLR, depending on your overall market stance, and what the stock ultimately does:
1) A long trade at $50
2) A short trade if CLR breaks below $50
3) A short trade at the down trending resistance (near $55)
4) If the stock breaks through the down trending resistance line, a short trade at the $60 resistance
5) A long trade if CLR can break up through $60
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT