Cimarex Energy Co. is an independent oil and gas exploration and production company. Its operations are located in Texas, Oklahoma, New Mexico, Kansas and Wyoming. As of year-end 2010, proved oil and gas reserves totaled 1.5 trillion cubic feet equivalent, consisting of 1.9 trillion cubic feet, consisting of 1.3 trillion cubic feet of gas and 105 million barrels of oil and natural gas liquids. In addition, Cimarex’s production averaged 595.9 million cubic feet equivalent per day, consisted of 363.9 million cubic feet of gas per day and 38,674 barrels of oil and natural gas liquids per day. Its exploration and development activities are conducted within three main areas: the Mid-Continent region, the Permian Basin and the Gulf Coast. During 2010, Cimarex sold oil and gas properties, mostly in Mississippi, and made property acquisitions, for additional interests in its western Oklahoma, Cana-Woodford shale play.
Please take a look at the 1-year chart of XEC (Cimarex Energy Co.) below with my added notations:
Over the last 8 months, XEC has formed a very important price level to watch at $70. As you can see from the chart above, $70 was a key resistance (navy) from August all the way up until February. That same $70 level should become support now that XEC is above it. Any break below $70 should bring the previous $60 level (green) back into play.
The Tale of the Tape: XEC has formed an important price level at $70. A long trade could be placed on any pullbacks to the $70 level with a stop placed under that level. IF the stock were to break below $70, a short trade would be advised with the expectation of a fall down to $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