Devon Energy Corporation in a downtrend

May 25th, 2012 – Comment

All things considered it looks like a miss for now.


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Lou,

Can I pick your brain on what the chart says for Devon Energy/DVN???

 

Thanks,

Steve

 

 

 

Hey Steve,

Thanks for the assignment. Devon Energy Corporation (DVN NYSE) is a leading independent North American oil and natural gas exploration and production company with land based operations. They also own gas pipelines and processing plants and is one of North America’s largest producers of natural gas liquids.

The production mix for the company is two thirds natural gas and one third oil and natural gas liquids such as propane, butane, and ethane. Daily production of natural gas is 2.5 billion cubic feet per day which is about 3% of all the gas consumed in the United States.

The charts will provide some insight as to the opportunities and risks associated with this stock.

 

 

 

The three-year chart tells the tale of a stock that has been labouring under the weight of a downtrend since late March of 2011 when it topped out at over $90.00 a share. Oh those halcyon days!

The death cross that formed in August of 2011 set the stage for the retreat that dragged values down to below $50.00 by October. The shares did catch a bounce off the lows and ran to resistance at $75.00 by April of 2012. We now find the shares holding onto support at $60.00.

 

 

 

The six-month chart depicts the double top that surfaced in February and March of 2012 and the sell signals generated by the MACD and RSI in the same time frame. At this point neither of the momentum indicators are suggesting that the stock is about to reverse the downtrend and start a new advance.

There are too many negatives on these charts to suggest it would be prudent to invest at this time. There is an established downtrend to contend with, no indications of a shift in momentum towards buying, a 50-day moving average bending towards a cross of the 200-day moving average, and a retest of support at $60.00.

In addition the rise in natural gas prices that surfaced in April gave the shares a small lift until it met resistance at $71.00 along the 50-day moving average. All things considered it looks like a miss for now.

Make it a profitable day and happy capitalism!

 

 

 

 

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