PDC Energy, Inc., an independent exploration and production company, acquires, explores for, develops, and produces crude oil, natural gas, and natural gas liquids in the United States. The company’s operations are focused primarily in the Wattenberg Field of Colorado, including the horizontal Niobrara and Codell plays; the Utica Shale in Ohio; and the Marcellus Shale in West Virginia. PDC Energy, Inc. operates in two segments, Oil and Gas Exploration and Production, and Gas Marketing. The Oil and Gas Exploration and Production segment produces and sells natural gas to midstream service providers, marketers, utilities, industrial end-users, and other wholesale purchasers; and crude oil and natural gas liquids. The Gas Marketing segment purchases, aggregates, and resells natural gas; and purchases natural gas produced by third party producers for resale.
Take a look at the 1-year chart of PDC (Nasdaq: PDCE) below with my added notations:
PDCE has steadily declined from its $70 high in June, and during the last 2 months the stock has created an obvious resistance at $45 (blue). The $45 level was also a 52-week low support back in January. A break above through $45 should mean higher prices for the stock.
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The Tale of the Tape: PDCE has a key level of resistance at $45. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $45.
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
Follow me on Twitter: @cmtstockcoach