Here’s how you can use volume characteristics to assess breakouts. Check out ConocoPhillips (COP) (December 29, 2014)
We’re looking at oil ( XOIL.X ). Why? Well, because it’s going lower, it’s been going lower for a while. If you look at the weekly chart, this puppy looks like $9.00; this thing looks like about as dead as dead can be, looks like it’s going to zero. Well, when I see that I tend to start wanting to look at stuff that is going to be overdone, that’s really what we want to look at here.
It’s really too early, really to be buying, with any kind of confidence, to be buying oil stocks, energy companies. Because, and I want you to think about this, look they can’t come out with a new iOil, that’s the letter “i” oil, it was supposed to be a joke; they can’t come out with that, they do oil dude, they’re like Jed Clampett, bubbling crude, that’s what they do. So if the cost of bubbling crude continues to go lower then their profits are going to go down, their costs are going to go up, because when you’re making something and you can’t get as much for it as you used to, then you’re definitely not going to be making more of it.
But with that said we also know that the market does start anticipating events before they occur. So you want to start looking at some stocks for essentially a prediction forecasting the bottom in oil. We’re not seeing it yet, but one of the stocks that I’m looking at is Conoco Phillips ( NYSE:COP ). Now the weekly chart, this looks about as ugly as ugly can be, right? Lower highs here, lower lows; we’ve got a bottom here though, a double bottom I would say at like 62ish, 63ish, big massive dump here.
But here’s what I’m looking at, I’m looking at a couple things here. First of all, on this move up, look at the volume, this was really, really big volume. Compare this volume to this volume on this last big move up. This means something, this, not so good, although even buying here you just didn’t make a boatload of money, but the stock did continue to move higher. But here, again look at the volume, big volume here, now this stock is just trickling sideways, a little bit of a pennant pattern here.
So what my suggestion is you look to see how this stock trades once it breaks out to here, I’ll give you a level, we’ll say 71.00; set your alert $71.00, I know I’ll set mine and I’ll ask Gary to set an alert for members when this alert’s triggered and we’re going to monitor this for a maximum, if it doesn’t do it in a week or so then it’s probably not going to do it. So you want to set an alert for about $71.00 and if this stock starts trading above that level you’re probably going to see continued move higher. The important thing is this volume, big volume relative to this last one and some consolidation here; so watch for that on Conoco Phillips ( NYSE:COP ).
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