Don't Ignore This Chart

Diamondback Energy (FANG) Coils

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Energy is the most beaten down sector. The SCTR is hanging out at 3.8 and 75 is a good score. It couldn't get uglier? Who knows, but there are a ton of positive divergences setting up on the energy related charts right now. Diamondback Energy (FANG) is coiling for a move here and it looks tempting for bottom fishers. If you are a breakout buyer, this won't be your chart.

First of all, price is trying to hold above a long-term support resistance level. Price has to hold $85 so the risk is tightly defined. I am watching closely for the Full Stochastics to turn up from a higher low. Commodity related stocks can do real well, just surging above the 10 WMA. The PPO is turning up as well with a higher low, so I like these divergences where the Full Sto and the PPO are making higher lows. If the big trend down on the PPO breaks, I think this stock can really start to move.


This is not for the timid but with the risk line just below this weeks low, it looks very interesting here.

I have posted a Commodities Countdown video recording 2017-08-31 marking this weeks breakout in Gold and a large discussion on the energy trade.

Commodities Countdown Video With Greg Schnell 2017-08-31 from StockCharts.com on Vimeo.

Enjoy the long weekend!

Good trading,
Greg Schnell, CMT, MFTA

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Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. Based in Calgary, he is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is also the author of Stock Charts for Dummies (Wiley, 2018). Learn More
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