Rosetta Resources Inc. (NASDAQ: ROSE)

Rosetta Resources Inc., an independent exploration and production company, engages in the acquisition, exploration, development, and production of onshore oil and gas resources in the United States. It owns producing and non-producing oil and gas properties located primarily in South Texas, including the Eagle Ford, and in the Southern Alberta Basin in Northwest Montana. As of December 31, 2011, the company had an estimated 965 billion cubic feet equivalent of proved reserves, including 36,370 million barrels of oil, 50,219 million barrels of natural gas liquids, and 446 billion cubic feet of natural gas, as well as drilled 53 net wells. Rosetta Resources Inc. was incorporated in 2005 and is headquartered in Houston, Texas.

To analyze Rosetta’s stock for potential trading opportunities, please take a look at the 1-year chart of ROSE (Rosetta Resources, Inc.) below with my added notations:

1-year chart of ROSE (Rosetta Resources, Inc.)

After running up nicely last fall, ROSE fell pretty hard into this year. Here recently the stock has been stalling at the key level of $50 (blue). You will notice that the $50 level has always been an issue for ROSE whenever the stock has been under it. That level was also a brief support in December.

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The Tale of the Tape: ROSE has a key level of resistance at $50. A short trade could be made on any rallies up to that $50 area with a stop placed above that level. A break back above $50 would negate the forecast for a lower move.

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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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