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Something’s gotta give on XTXI - the Mesh Report

Something’s gotta give on XTXI

Christian Tharp, CMT October 24, 2011 0

For today’s stock, I am going to stick with last week’s 52-week high topic that was reviewed on THOR. So, when it comes to entering a stock hitting a 52-week high, I prefer to look for ones hitting a “NEW” high. To me, his would be a stock that hasn’t hit a new 52-week high in quite some time. In addition, and more importantly, I want the stock to have broken through a key area of resistance. This way I know that it wasn’t just any move higher. One such stock that fits that description would be that of Crosstex Energy, Inc.

Crosstex Energy, Inc. is engaged in the gathering, transmission, processing and marketing of natural gas and natural gas liquids through its subsidiaries. Currently, the company owns 25% of the interest in Crosstex Energy, L.P. through its wholly owned subsidiaries. The Crosstex partnership is an independent midstream energy company. Crosstex Energy GP, LLC, a wholly owned subsidiary of the company, is the general partner of the partnership, which owns a 2% general partner interest and all of the incentive distribution rights in the partnership. The partnership focuses on the gathering, processing, transmission and marketing of natural gas and natural gas liquids, which the partnership manages as regional segments

To review Crosstex Energy’s stock, please take a look at the 1-year chart of XTXI (Crosstex Energy Inc.) below with my added notations:

(Click for full-sized image)

 XTXI has been repeatedly running up against the $15 resistance (red) for the last 4 months. That $15 resistance meets my definition of a clear resistance level that would signify an important 52-week high breakout if XTXI could manage to break above it. At the same time, XTXI seems to have formed an up trending support (green) level that appears to be around $13 at this time.

 

The Tale of the Tape: XTXI has formed a key resistance level at $15, which would be considered a 52-week high breakout if the stock can break above it. A long trade could be entered on a breakout above $15, or if XTXI pulls back a bit further to the up trending support level near $13, with a stop set below either entry level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT



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