3 Views on Murphy Oil Create the Same Mosaic

• Posted by Greg Harmon
• on October 3rd, 2016

Murphy Oil is an oil and natural gas exploration company headquartered in El Dorado, Arkansas. I have never been to El Dorado, Arkansas, but I love the name. The company does great things there. Aside from looking for oil and natural gas it has set aside $50 for college education of any student that goes through the school system there. Their stock price has had a rough road over the last 2 years.

From a high in July 2014 it sank to a bottom in February this year. But since then it has been improving, or maybe it hasn’t. This is often the knock against Technical Analysis. You can draw lines where ever you want to make a case. I guess it all depends on how you look at it. The chart below is marked up to give 3 different interpretations. And all of them are somewhat bullish.

chart

First look at the 2 purple lines. In this interpretation, the stock has broken out of a descending triangle to the upside. This would give a target move to 43. That is quite bullish. Shifting your focus to the red lines shows a falling channel with the price testing the top of the channel. A push higher would be bullish and set a target of at least 38. Finally the green line shows the price has moved up to the top of a shorter parallel channel. A push over the top would be bullish and look for a move to 38 as well.

You could probably draw many other interpretations as well. But adding in a couple of indicators, in this case the RSI and MACD, there is weight added to the case for a move higher. It does not matter which scenario you follow, so long as you have a plan to manage risk. But when you have a stock with a mosaic created by price and indicators that are looking for a move in the same direction the chances are higher it will happen.

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