A recent filing shows that Warren Buffett continues to hold an outsized position in Occidental Petroleum stock. Is it time for investors to as well?
Energy stocks are on the move on Monday morning. That’s as the S&P 500 pushes higher, as oil prices jump and as Warren Buffett remains a bull in Occidental Petroleum (OXY) – Get Occidental Petroleum Corporation Report.
A Schedule 13-G updated investors on Friday after the close that Buffett’s Berkshire Hathaway (BRK.A) – Get Berkshire Hathaway Inc. Report (BRK.B) – Get Berkshire Hathaway Inc. Report had confirmed its recent stake in Occidental Petroleum, which now stands at 26.8% when including the warrants.
Occidental shares are up about 2.5% on the day, as investors feel a bit more emboldened by Buffett’s position with the stock.
For what it’s worth, Buffett has regulatory approval to buy up to 50% of the firm.
Shares of Occidental Petroleum have traded quite well so far this year, up more than 130% even though shares are down about 13% from the highs. That said, it hammered out a nice support level last week, so let’s take an updated look at the charts.
Trading Occidental Petroleum Stock
Daily chart of Occidental Petroleum stock.
Chart courtesy of TrendSpider.com
When I look at the daily chart above, the most notable thing to me is how Occidental stock held the 50-day moving average and the $64 to $64.50 level over a span of three straight days. That’s a nice area of support that has now been carved out.
Further, the stock was stuck between $65.88 and $66.20 on the upside, while stuck below the prior breakout level under $66.
With today’s rally, Occidental stock has now cleared this area. As a bonus, it held this zone as support after this morning’s initial dip.
So where does that leave us? As it stands, shares have reclaimed prior resistance and the breakout level at $66, held this area as support and hammered out a notable low around $64 and the 50-day moving average.
Those who are bullish may look to ride a long position in Occidental Petroleum, while noting that shares are still struggling with active resistance via the 10-day moving average and need to reclaim the 21-day moving average to see a sustained move to the upside.
For what it’s worth, the weekly chart is relatively clean.
If shares can reclaim the short-term moving averages, then a move to the $71 to $71.50 area could very well be in the cards.
Above that opens the door back to the $75 area and the high near $77.
On the downside, keep it simple. A break of $66 puts $64 and the 50-day back in play. Below that and bullish traders may consider using a stop-loss in the $63 range — particularly on a close below $64 — as their risk management point.
