Southwestern Energy Company (NYSE: SWN)

Southwestern Energy Company, an independent energy company, engages in the exploration, development, and production of natural gas and oil primarily in the United States. The company operates through two segments, Exploration and Production, and Midstream Services. The Exploration and Production segment primarily focuses on the Fayetteville Shale, an unconventional reservoir located in the Arkoma Basin in Arkansas; and is involved in the exploration and production activities in the Marcellus Shale play in Pennsylvania, as well as in Texas, Arkansas, and Oklahoma. It also engages in exploration activities in the Lower Smackover Brown Dense formation in Arkansas and Louisiana; the Marmaton and Atoka formations in the Denver-Julesburg Basin in Colorado; the Bakken and Three Forks formations in Montana; and in New Brunswick, Canada, as well as operates drilling rigs in Arkansas, Pennsylvania, and Louisiana. The Midstream Services segment provides natural gas gathering, marketing, and transportation activities in Arkansas, Texas, and Pennsylvania.

To review Southwestern’s stock, please take a look at the 1-year chart of SWN (Southwestern Energy Company) below with my added notations:

1-year chart of SWN (Southwestern Energy Company)

SWN has been trading sideways for the last 8 months. Over that period of time, the stock has formed a clear resistance level at $40 (red). In addition, the stock has also created a strong level of support at $35 (blue) that has held since the end of April. At some point the stock will have to break one of those two levels.

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The Tale of the Tape: SWN has clear levels of support ($35) and resistance ($40). The possible long positions on the stock would be either on a pullback to $35, or on a breakout above $40. The ideal short opportunity would be on a break below $35.

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!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach

Follow me on Twitter: @cmtstockcoach