Friday, July 26, 2013

ONEOK surges, respecting longer-term resistance levels

JUL26 1538EST. Shares of ONEOK, Inc. (OKE) are not usually tracked by intraday traders, mostly as their average volume is relatively light (1.6M per day over the past 3 months). Yesterday, however, OKE gapped higher on news of a divestiture and, from the first minutes of trade, the pace of volume was several times (5x-10x) higher than the daily average. Even with a nearly 15% gap up, the first 5-minute high was surpassed before 9:40am, suggesting the potential for further upside.

OKE (ONEOK, Inc). May 2012 to July 2013. Daily candles.

Looking at the daily candles chart above, two resistance levels are clear: ~$50 and ~$52.25. The former was formed by three pivot highs over the past year, while the latter marks the all-time high (and the stock is no recent IPO; it's been trading for at least 20 years).

OKE (ONEOK, Inc). Jul 25, 2013. 1-minute candles.

And examining the intraday chart, the discerning observer can see that OKE respected these long-term resistance levels with almost surgical precision. On the first approach of price to either $50 or $52.25, a short position would have yielded quick profits. And on the break of either level, a long position would have likewise been profitable and, going with the day's trend, relatively easy to initiate.

Oftentimes, trades around long-term support or resistance levels are not quite this easy due to the incidence of false breakouts. Not so in the quite okay trades on Jul 25 in OKE.

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