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Woodside Petroleum Ltd (WPL) is an Australia-based oil and gas company established in 1954. It, along with its subsidiaries, is engaged in hydrocarbon exploration, evaluation, development, production and marketing. Woodside recently paid a dividend of $1.14 with an annual dividend yield of approximately 5.5%. Analyst opinions vary at present with six suggesting an Underperform, three Hold and four suggesting Outperform*.
The chart of Woodside Petroleum below shows the stock has been caught in a sideways band since July 2013 between $37 and $39.50. As at writing the stock stands mid-range with no evidence of a significant break one way or other at this juncture.
UThe recent reversal seen off the upper boundary was due to the company going ex-dividend as mentioned above. That said, the longer a stock remains trapped in a sideways band, the better the potential move will be once the band is penetrated.
For a sustained trend to start unfolding we first need to see the upper area break on increasing volume. Volume is similar to the fuel in a car – it drives prices. So a breakout coupled with increasing volume will give us confidence of a new developing trend, but any lack of volume suggests buyers aren’t overly committed and another reversal could occur. A breakout on higher volume portends a move to $41 to $42. We would be concerned if prices broke down and through the lower $37 boundary as it would point to, at best, more sideways activity, or at worst a move back toward $32 to $33.
Currently our momentum model does not hold any positions in Woodside although a move up and through $39.50 would initiate a new buy signal.
*Source: Thomson Reuters
Nick Radge heads a team of technical analysts at The Chartist, reviewing individual stocks and markets. Nick Radge is Head of Trading & Research at The Chartist. The Chartist reviews individual stocks and markets and provides trading strategies for individuals. AFSL 288200. You can view The Chartist’s Conflict of Interest policy at www.thechartist.com.au
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