Cimarex Energy’s downtrend and 200-day moving average
Declining crude oil and natural gas prices over the last 19 months are dragging the entire upstream sector into a downtrend. As seen in the below chart, Cimarex Energy (XEC) is currently trading below its 50-day and 200-day moving averages by ~8% and ~21%, respectively. XEC’s stock price is in a downtrend where it is making a pattern of lower highs and lower lows.
XEC’s stock price broke its 200-day moving average in October 2014. Since then, XEC regained its 200-day moving average in April, August, and October last year, but failed repeatedly to hold above it.
XEC’s relative strength
XEC has shown good relative strength and has been holding well when compared with other upstream stocks. Its relative strength is evident in its 2015 decline of only ~16%. EOG Resources (EOG), Range Resources (RRC), and Southwestern Energy (SWN), other oil and gas producers from the S&P 500 (SPY), are down ~23%, ~54%, and ~74%, respectively.
XEC’s 3Q15 earnings
In 3Q15, excluding the one-time items, XEC reported a loss of $0.15 per share, $0.07 worse than analyst consensus for a loss of $0.08 per share. The company’s revenues fell ~45% year-over-year to ~$356 million.
What do these headline numbers mean? Are these numbers good or bad for XEC? Why is XEC’s stock price is in a steep downtrend and unable to hold above its 200-day moving average? We will try to answer all these questions in subsequent parts of this series by studying XEC’s earnings, past events, various fundamental ratios, and key drivers for its stock price movement.