Using Technical Analysis to Identify Valid Buying Opportunities

If you’re working a value-focused oil stock portfolio, it may be easy to find several services that offer a fundamental view of this type of stock. When looking at the list, however, one may be faced with the difficult decision of choosing the stock or stocks in which to invest.

It may help the decision process if we use technical analysis to determine which stocks are at or near value areas based on the trend and price analysis. With stocks at such lofty levels at this time and traders seemingly hesitant to buy strength for fear of entering at a top, it may be beneficial to use technical analysis to identify valid entry areas using a simple technique.

Fundamentally speaking, these stocks have made several lists consisting of highly rated oil and gas stocks for 2014. The consensus identifies a few of the best stocks as:

TOT – Total SA

BP – BP PLC

OXY – Occidental Petroleum Corp

XOM – Exxon Mobil Corp

CVX – Chevron Corp

Technically speaking, if we define an uptrend as a series of higher-tops and higher-bottoms then these stocks are all in clearly defined uptrends. While they all may be in the buy and hold category, value-based buyers tend to look for better-than-market entries.

Looking at Total SA (TOT) weekly chart, one sees a clearly defined uptrend. Based on the short-term range of $56.03 to $73.52, technical analysis identifies the best value area as $64.78 to $62.71.

BP…