Oil/Gas and Exploration stocks look like they could be on the verge of going higher. So, we looked under the hood of SPDR S&P Oil & Gas Exploration & Production ETF (XOP) to find potential trading targets. We didn’t have to go past XOP’s #1 holding, Tellurian Inc. (TELL).
Tellurian engages in the natural gas business worldwide. The company is developing a portfolio of natural gas production, liquefied natural gas (LNG) marketing, and infrastructure assets that includes an approximately 27.6 million tons per annum LNG export facility and an associated pipeline. It owns interests in 11,060 net acres of natural gas assets and 78 producing wells located in the Haynesville Shale trend of northern Louisiana.
What we really like about TELL is its reward-to-risk set up. The natural gas company should find a double layer of support at $3.90; it’s Tellurian’s 200-day moving average and what should be a solid level of technical support. On the upside, if bulls can push TELL shares past $4.25, it could move up to resistance at $4.90 to $5.00.
As we type, TELL trades for $4.14. Based on our technical view, TELL has $0.24 downside to support and $0.76 upside to $4.90. That’s a 3-to-1 reward-to-risk ratio and one we can work with.
Day/Swing trading is risky and only appropriate for the most aggressive investors who can afford to lose large sums of money in short timeframes.