Oasis Petroleum Inc., an independent exploration and production company, focuses on the acquisition and development of unconventional oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin. The company’s principal projects are located in West Williston and East Nesson. As of December 31, 2014, it had 505,503 net leasehold acres in the Williston Basin; and approximately 272.1 million barrels of oil equivalent of estimated net proved reserves. The company sells its oil and natural gas to refiners, marketers, and other purchasers that have access to pipeline and rail facilities.
Take a look at the 1-year chart of Oasis (NYSE: OAS) with the added notations:
Although the stock has ridden some big ups and downs along the way, OAS has been bouncing on top of a clear $8 support (green) over the past 5 months. Now that the stock appears to be testing that support level again, traders should be able to expect some sort of bounce. However, the stock’s recent underperformance is a bit concerning. If the $8 support were to break, lower prices should follow.
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The Tale of the Tape: OAS has a key level of support at $8. A trader could enter a long position at $8 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.
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