Gulfport Energy Corporation (NASDAQ: GPOR)

Gulfport Energy Corporation engages in the acquisition, exploration, exploitation, and production of natural gas, natural gas liquids (NGLs), and crude oil in the United States. The company’s principal properties are located in the Utica Shale primarily in Eastern Ohio; Louisiana Gulf Coast in the West Cote Blanche Bay; and Hackberry fields. It also has interests in the Niobrara Formation of Northwestern Colorado; Bakken Formation; entities that operate in Southeast Asia, including the Phu Horm gas field in Thailand; and Alberta oil sands located in Canada. As of December 31, 2014, the company had 933.6 Bcfe of proved reserves, as well as undeveloped reserves totaled 3,778 thousands of barrels oil, 373,840 millions of cubic feet natural gas, and 13,889 thousands of barrels of NGLs.

Take a look at the 1-year chart of Gulfport (NASDAQ: GPOR) below with added notations:

1-year chart of Gulfport (NASDAQ: GPOR)

After its April through July decline, GPOR started trading sideways over the next couple of months. While in that sideways move, the stock has formed a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern.

GPOR’s rectangle pattern has formed a resistance at $36 (red), and an $32 support (green), which it barely held yesterday. At some point the stock will have to break one of the two levels.

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The Tale of the Tape: GPOR is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $32 or on a breakout above $36. The ideal short opportunity would be on a break below $32.

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