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TECHNICAL ANALYSIS


Apache Corporation Testing Key Resistance

09/04/03 12:10:49 PM
by Kevin Hopson

Apache Corp. has been in a steady uptrend for the last 10 months but is now approaching a key resistance level.

Security:   APA
Position:   Hold

Apache Corp. (APA) has been in a nice uptrend since November of last year, appreciating roughly 47 percent since then. However, the stock is now testing key resistance around the $69.00 level. Will Apache break through and hit a new 52-week high in the process or will the stock proceed to pull back from current levels? If we look at the one-year chart for Apache, we may be able to draw our own conclusion.

For example, notice how the moving average convergence/divergence (MACD) put in higher lows between mid-June and early August, while the stock price continued to decline. This was a bullish divergence on the chart and indicated a potential bottoming pattern. As you can see, Apache eventually broke to the upside, thus confirming this pattern.

Graphic provided by: Stockcharts.com.
 
Unfortunately, the MACD is now putting in lower highs despite the fact that the stock price continues to move higher. Additionally, Apache is facing significant overhead around the $69.00 level, site of its 52-week high (dotted red line) and the bottom green parallel line. Given the bearish divergence we are seeing on the chart and substantial resistance at slightly higher prices, I would be cautious on the stock in the near-term.



Kevin Hopson

Kevin has been a technical analyst for roughly 10 years now. Previously, Kevin owned his own business and acted as a registered investment advisor, specializing in energy. He was also a freelance oil analyst for Orient Trading Co., a commodity futures trading firm in Japan. Kevin is currently a freelance writer.

Glen Allen, VA
E-mail address: hopson_1@yahoo.com

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Date: 09/10/03Rank: 4Comment: 
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