ConocoPhillips – Better off as Friends
- Posted by Greg Harmon
- on September 27th, 2012
April 12, 2012 ConocoPhillips, $COP, divorced, spinning off Phillips 66, $PSX, to ‘unlock shareholder value’. This is the common stated reasoning for spin offs but most suspect that insiders benefit more than shareholders. And looking at the charts of both that stereotype was reinforced….for about 6 weeks. Since then both have been screaming higher, giving little opportunity for a clean entry. That may be about to change. Lets look at the charts.
ConocoPhillips, $COP, has been in a rising channel since early June. The latest pullbakc is finding support at 57 and this looks like a good level to enter long against. The Relative Strength Index (RSI) is bullish and holding the mid line with a turn back higher. There is only the previous top near 58.50 keeping it from a breakout of the current flag to the upside target at 60.50, with the price objective of the 3-box reversal Point and Figure chart (PnF) at 65 above that.
Phillips 66, $PSX
Phillips 66, $PSX, has also been running higher since the beginning of June. It is consolidating in a bull flag with a top at 47 and has a target on a break out higher to 51. The bullish RSI supports a move higher here as well. If you can only pick one then you should also be aware that the PnF price objective for Phillips 66 is all the way up at 85.
So maybe the stereotype is not always right. Moral of the story: Pay attention to price action and not what investing folklore.
Disclosure; I bought $PSX earlier today for family in a long term account.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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