Shares of ConocoPhillips (COP) - Get Report were sharply higher again on Thursday. While other major names in the space, such as Exxon (XOM) - Get Report and Chevron (CVX) - Get Report , stalled yesterday, ConocoPhillips appeared to break out. The stock finished the session with a 3.5% gain, making it one of the top 10 gainers in the S&P 500.
This powerful move, which attracted the heaviest volume since March, extends Wednesday's OPEC-inspired 7% surge. Following the last two extremely bullish sessions, ConocoPhillips is set up well for more upside.
After peaking in late April just above $49, ConocoPhillips has been steadily drifting lower. During this phase, the stock has spent the bulk of the time below its declining 200-day moving average. Despite this heavy overhead pressure, further downside has been very limited. ConocoPhillips has been able to build a very solid base near the $39 area while holding in very close to the 200-day. With shares now firmly back above this long-term indicator, the support zone near the April, August and September lows is now of major importance.
In the near term, ConocoPhillips bulls should view the stock as a buy on weakness. The stock now has a very solid nearby support area in place between $43 and $41. ConocoPhillips' 50- and 200-day moving averages are sitting just above the $41 area. On the downside, a close back below $39 would signal another failed attempt at a breakout above the 200-day. If ConocoPhillips can build on the recent upside momentum, the foundation is now in place for a powerful rally phase.
This article is commentary by an independent contributor. At the time of publication, the author was long COP.