Cimarex Energy Co.
We're seeing almost the same setup in shares of mid-cap oil and gas company Cimarex Energy Co. (XEC - Get Report) right now. Like BofA, Cimarex is forming an ascending triangle, a setup that's formed by horizontal resistance to the upside and uptrending support below shares. Basically, as shares of XEC bounce in between those two price levels, they're getting squeezed closer to a breakout above $63 resistance. When that happens, we've got a buy signal in this stock.
It's important to look at what's going on technically in XEC in terms of real buyers and sellers. $63 is a price level where sellers have been more eager to sell and take recent gains than buyers were to buy; a breakout above $63 tells us that buyers have built up enough steam to absorb all of that excess selling pressure that was causing $63 to act like a price ceiling for shares. That's why we want to be buyers after the breakout happens -- this isn't a high probability trade until those sellers get pushed back.
The fact that $63 acted as a support level back in April and May (those two blue arrows on the chart) is important -- it adds some extra significance to the strength of that $63 level to XEC shareholders. Don't be early on this trade.