The Dow Jones U.S. Exploration & Production Index ($DJUSOS) is 39% higher since its January low and two mid-cap stocks that are outperforming include $4 billion QEP Resources (QEP) and $2.9 billion WPX Energy (WPX). They have both been overbought recently and now have printed negative divergences, but their relative strength, along with solid SCTRs suggest they could be bought on pullbacks. Both charts are similar, so let's focus on one example - QEP:
The pink arrows are typically what I look for in terms of retracement after a negative divergence prints. An upcoming 50 day SMA test would be worth considering for entry.
Happy trading!
Tom
About the author:
Tom Bowley is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market.
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