Hi everyone! Today, we’ll look at one of Warren Buffett’s favourite stocks:
Occidental Petroleum (NYSE: OXY)
On the weekly chart, we can see that the stock is forming higher highs and higher lows. The higher lows are marked by the green trendline on the chart. The stock is currently trading in a bull flag pattern. It has been consolidating at the 55.51 level, which has acted as support on previous occasions. Notably, Warren Buffett has been buying around 55-56, which is a sign that “Big Money” is actively accumulating this name.
Note that there is also a hidden bullish divergence forming with RSI forming lower lows, while the stock continues to make higher lows and seeing a retest of the ascending green trendline.
Interestingly enough, the daily chart shows a small regular bullish divergence (higher lows on RSI while price moves lower) nestled within a hidden bullish divergence, which suggests an imminent bounce/reversal is in play.
Subsequently, we saw a gap up above the daily 20MA, with a retest during yesterday’s regular trading hours. This could be indicative of a trend change to the upside and out of the bull flag consolidation pattern - but we’ll need a breakout above 64-65 to confirm it.
In terms of price targets, we are looking at some of the levels marked out on the chart. Many of them were top wicks formed on high volume, which are likely to be revisited in the future.
All I’ll say is - don’t fade Buffett. He may be a nonagenarian, but he sure knows a thing or two about buying stocks.
Sentiment: BUY
Summary (with Price Targets - NFA):
Bull flag consolidation setup with a measured move above 77.13 (July 2022 high) in the coming months, targeting 87.67 (April 2018 high)
Shares might be a better play than options as OXY can chop around for sustained periods of time, unless you buy time on the options (more than 2-3 months expiry would be ideal, with reasonable strikes)
On higher timeframes, accumulation is suitable around these levels, provided that we do not lose 55.51
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