Today’s Daily Alert is another opportunity to take advantage of the favorable market environment with a strong momentum stock. Here’s the recommendation, from Cabot Top Ten Trader Editor Michael Cintolo.
“Independent oil and gas exploration firm Pioneer Natural Resources Co. (PXD, $112) has been a standout in the energy sector this year. Like many domestic energy concerns, Pioneer has ridden the rising tide of U.S. oil production, which has soared to its highest level in 13 years due to unconventional oil and gas extraction methods, such as hydraulic fracking.
“Texas has been a player in these new exploration and extraction methods, and Pioneer holds considerable sway in the area, maintaining exposure to the highly lucrative oil shale fields in East and West Texas. Despite persistently low natural gas prices, Pioneer has benefited from increased productivity and output from the West Texas Spraberry and Wolfcamp shale formations. Currently, 35% of Pioneer’s production and 50% of its proved reserves are in the Spraberry and Wolfcamp regions. The company appears to be doubling down on the area, selling its South African operations earlier this year, while recently announcing the sale of properties in the Barnett shale region of Texas. The sale of the Barnett region is expected to help Pioneer reduce its debt load. With the prospect of higher natural gas prices heading into the winter months, and liquid natural gas and oil prices holding firm, Pioneer’s future looks great.
Technical Analysis
“Since rebounding from support near 80 in June, it’s been all uphill for PXD shares. The stock has reclaimed all of its major moving averages, including breaking above both its 50-day and 200-day moving averages last month. PXD has even pulled its 10-day and 25-day trendlines into a bullish cross, a technical formation that often precedes periods of additional upside. Additionally, after sidling beneath the century mark for most of August, PXD finally eclipsed 100 early this month, resulting in an influx of buying pressure that sent shares soaring above 110. You can buy here, but take small bites and remain cautious, as PXD could be a bit overextended following its recent run. Pullbacks to 110 would be ideal accumulation points, while a stop loss at 102 makes sense. Suggested Buy Range: 109-113. Cabot’s buy range is valid for two weeks.”
- Michael Cintolo, Cabot Top Ten Trader, September 17, 2012