We recommend closing short positions in Neurocrine Biosciences (NBIX) because it has a short-term oversold upturn to suggest its current bounce has more room to run.
Our short-term sector rotation work suggests energy will finish the year strong after becoming oversold relative to the SPX. To take advantage of a short-term extension higher, we recommend a position in Murphy Oil Corp. (MUR):
MUR has rebounded after a successful test of support at the daily cloud (shaded area on the chart). The recent upmove is associated with an oversold upturn in the weekly stochastics, which suggest that the daily MACD is likely to flash a “buy” signal in the coming days.
The last two daily MACD “buy” signals (July and October) produced short-term rallies within the long-term trading range. We think the current signal has promise, with positive seasonality offering a potential boost.
Resistance from the November high, near $50.00, can be used as a targeted level for MUR. We are using support from the daily cloud, near $41.60, for the basis of a stop-loss that would be triggered on consecutive daily closes below.
Murphy Oil Corp. (MUR, $43.65):
Target: $50.00
Stop-Loss: $41.60