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As a source of our newest idea, the energy sector has shown strength in recent weeks. To take advantage, we highlight a long opportunity in Civitas Resources (CIVI), a midcap oil and natural gas company:
CIVI is in a long-term uptrend supported by newly positive long-term momentum. As a catalyst, CIVI has a breakout above resistance near $74-$75 extending back to the March 2023 high. This supports upside follow-through as the uptrend persists.
The breakout reflects positive short- and intermediate-term momentum, noting CIVI is above its rising 50-day (~10-week) moving average. This has allowed CIVI to sustain overbought conditions per the weekly stochastics and there are no signs of upside exhaustion from the DeMARK Indicators®.
As a price objective for a long position in CIVI, we would use resistance at the June 2022 price high near $85. A stop-loss can be placed at $74, below the breakout point, to manage risk.
Civitas Resources (CIVI, $77.48)
Target: $85
Stop-loss*: $74