2 Commodity Stocks to Buy on the Dip: COP, OXY

Earnings season is kicking into gear and the bears are lurking once again on Wall Street. With the Fed taper headwind behind us, markets are now looking to corporate earnings for confirmation of the improving growth prospects, which have been bolstering expectations and stock prices higher alike throughout all of 2013 [for more commodity futures news and analysis subscribe to our free newsletter].

With no clear headwinds in sight on Wall Street until the debt-ceiling debate is potentially reopened late-January ahead of the 2/7/2014 deadline, many are positioning themselves for further gains. As such, below we take a look at two commodity stocks that are trending higher, but have slipped in the last few trading sessions, thereby offering an attractive opportunity to “buy on the dip” in the near future.

The stocks included here are rated as “buy” candidates for three reasons: First and foremost, each of these companies boasts a market cap upwards of $10 billion along with average daily trading volumes topping the 1 million mark, in an effort to weed out smaller, more volatile, trading prospects. Second, these securities are trading above their 200-day moving averages, thereby implying they are in longer-term uptrends. Thirdly, these stocks are also trading below their five-day moving averages, which makes them attractive for swing traders looking to buy in before they rebound. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques [see 5 Commodity Trading Mistakes You Could Be Making].

ConocoPhillips (COP)

Consider COP’s two-year daily performance chart below.


Click to Enlarge

This stock has traded higher along a steadily rising trend line as evidenced by how it oscillates around the blue regression line, which extends from its 2012 lows ($50.62 a share) up through today. The uphill ride has been far from smooth, however, as COP has staged a few steep corrections along the way; nonetheless, this stock has remained within its regression channel boundaries (red lines). With COP currently nearing the lower-half of its longer-term trading range, we feel that the stock may be setting up for a nice rebound in the coming sessions.

Occidental Petroleum (OXY)

Consider OXY’s two-year daily performance chart below.


Click to Enlarge

This stock has traded higher within a fairly well defined channel (blue lines) since bottoming out in late 2012 just below $75 a share. OXY is nearing its 200-day moving average (yellow line), which it has previously rebounded off in two instances throughout 2013; what’s concerning this time around is that the stock failed to surpass previous resistance around $95 a share. With OXY currently nearing the lower-half of its longer-term trading range, we feel that the stock may be setting up for a nice rebound in the coming sessions.

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Disclosure: No positions at time of writing

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Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

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