by Sam Collins 09/04/08
Apache Corp. (APA) -- This exploration, development and production company of natural gas, natural gas liquids and crude oil has been a darling of the energy analysts.
We've followed Apache for a long time and have been impressed with its steady growth, earnings and, longer-term, the tight trading range that usually settles on the 200-day moving average as its major support line. But in March, APA, along with crude oil, began to accelerate to a point that a correction was almost inevitable.
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With APA at $130, the stock broke down from a somewhat imperfect head-and-shoulders reversal with a downside objective of $110.
Apache is just below the price objective of the breakdown, is several points above its long-term bullish support line, and has issued two buy signals from our internal proprietary indicator -- the Collins Bollinger Reversal (CBR). Positions taken now could prove to be very rewarding.
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The opening looks to be higher but today is options expiration day, and anything could happen.
Chances are high stocks will sell off further, but be alert for a dead-cat bounce after such a dramatic breakdown.
Traders and longer-term investors should sell any new positions at the first opportunity and short ETFs on a temporary recovery in the market.
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