Comstock Resources, Inc. is engaged in the acquisition, development, production and exploration of oil and natural gas. The company’s oil and gas operations are concentrated in East Texas/North Louisiana, South Texas and West Texas. The company’s consolidated proved oil and natural gas reserve base is 85% natural gas and 15% crude oil. Its proved reserves are 46% developed on a billion cubic feet equivalent basis as of 2011. The company completed two acquisitions of producing oil and gas properties. It acquired 25.2 million barrels of oil equivalent in the Delaware Basin in West Texas on December 29, 2011.
Please review the 1 yr chart of CRK (Comstock Resources, Inc.) below with my added notations:
During most of the last (8) months CRK has been holding a very important level of support at $15 (black). Over the last (4) months the stock has continually hit resistance at $17.50 (blue). As you can see from the chart above, CRK is currently trading between those two levels. Lastly, if the stock should ever break above the $17.50 resistance, the next level up should be the $20 level (red), which can be easily seen during the fall of last year.
The Tale of the Tape: CRK has a very important support at $15 and a current resistance at $17.50. Long trades could be made on any pullbacks to $15, or on a break above $17.50, with a stop placed under the level of entry. A short trade should be made if the stock were to break below $15 with a stop placed above that level.
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