Good afternoon all. This morning I added to Kodiak Oil (KOG) on the dip, per my updates. With crude oil under some pressure today and the indices in the red, we saw a small dip allowing for cheaper shares to be accumulated. The chart itself makes me very bullish on KOG which is likely growing stronger due to the positive beliefs in this stock ranging from fundamentals to higher crude prices to positive news on the drilling front with acquiring more land. KOG looks set to run higher this summer and these prices could turn out to be very cheap by third quarter, and even in a few weeks. Let us take a peak at the chart.
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Per the YTD chart above, we can see the beautiful A/D line trending north with strong accumulation. The CMF (21) shows the heavy buying pressure making me further bullish. Selling has not been strong at all and probably just some profit taking here and there. What I like most about the YTD chart is the RSI trending towards neutral territory. Many would consider this a bad sign but I view it as a sign that, when combined with the other indicators, will allow us to hit higher levels during the next strong uptrend in the PPS. Over 70 is typically starting overbought territory and I generally believe over 60 starts to put you in that range of limited upside, sometimes. With the RSI trending below 50 on the YTD chart, we could view this as a breather before another leg up. However, crude oil and the indices itself will play a big part in if this chart deteriorates from here or strengthens. Make sure you have plenty of cash to buy in increments just in case we see a further correction in the indices that drags KOG with it.
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Per the 5-day chart above, we can see the short-term A/D line still highly positive. We want to see the OBV starting to trend north soon. The RSI bounced off the oversold territory nicely and we’d like to see it settle in the 40 range or lower while the A/D line still grows and the OBV starts to trend up. At that time, we could be seeing a strong intraday move up anytime soon. The CMF (15) shows a battle going on between the bulls and bears and if it turns positive with the other indicators moving in the right direction, we could be seeing a very significant move once resistance is taken out.
Judging from the L2, we don’t have any major resistance until the upper 3.70’s. However, this doesn’t seem to be overly strong as a nice volume surge to the north should break that resistance and allow for better breakout from there. This could be seen shortly with positive earnings expected around the corner so pay close attention to any indicators that earnings might disappoint, which I don’t expect it to. As always, do your own homework to see if you agree. Good luck out there.
Mike
At the time of publication, Kudrna was Long KOG but positions can change at any time.
Random News: Good views on the oil front per this article. Some would view that as bearish but the fact that they are talking about $100 crude oil this year makes me very excited about adding more oil to my portfolio. Also, if you haven’t already, run, don’t walk to read Part 1 of Daytraders Strategy.
