Oasis Petroleum Inc. (NYSE: OAS)

Oasis Petroleum Inc., an independent exploration and production company, engages in the acquisition and development of oil and natural gas resources in the Montana and North Dakota regions of the Williston Basin. Its primary projects are located in West Williston, East Nesson, and Sanish. As of December 31, 2012, the company had 335,383 net leasehold acres in the Williston Basin; and had approximately 143.3 million barrels of oil equivalent of estimated net proved reserves. Oasis Petroleum Inc. was founded in 2007 and is headquartered in Houston, Texas.

Please take a look at the 1-year chart of OAS (Oasis Petroleum) below with my added notations:

1-year chart of OAS (Oasis Petroleum)

OAS has had a rough slide over the last 3+ months. Along the way the stock has created a clear down trending resistance (red). In addition, the stock has a key level at $40 that has been support and resistance off and on throughout the entire year. At some point soon the stock will have to break one of those two levels.

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The Tale of the Tape: OAS has a key level of support at $40 and a down trending resistance that currently sits near $44. A long trade could be made at $40, or on a break through $44, with a stop placed below the level of entry. However, if the stock were to break below $40 traders might want to look to get short on the stock.

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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

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