On the week ending Friday, June 22nd, 2012 energy stocks were down over 3%. The Energy Select Spider (XLE) plummeted 3.32% as many big named oil companies struggled throughout the week. On Thursday, June 21st, the XLE dropped significantly as it pierced its 20 day moving average to the downside. After the strong move lower the XLE formed a cross pattern on Friday giving some bulls hopes that the energy names will move higher during the coming week.
Dril Quip Finds Support at 20 Day Moving Average
Dril Quip (DRQ) has struggled to find new highs in June 2012. Since the beginning of May this stock has dropped from $76 a share all the way to $58. A recent move higher pushed DRQ to its 200 day moving average but it the 200 dma was a strong resistance level. In fact, the 200 dma was the highest point of the week ($66 a share). It will be very interesting to see if DRQ can bounce off its 20 day moving average and move back up to the 200 dma. It is a very interesting time for this stock as the 20, 50 and 200 day moving average are within a few percentage points.
Photo by nestor galina via Flickr
Short term investors are looking for a bounce off the 20 day moving average while long term investors would love to see the stock move through its 200 day moving average with some conviction. Until heavy volume comes in it will likely be the case that the stock will stabilize between the 20 and 200 day moving average. When looking at the chart of this stock it is quite evident that we will see some movement with conviction in the very near future.
Oil and energy stocks have not lead the stock market for quite some time. There is a good chance we could see sector rotation into some of the more popular names but the XLE will need to be well above its 200 day moving average before there is any chance that this sector will lead all stocks higher.