Wednesday, October 16, 2013

Phillips 66 (NYSE: PSX)

Phillips 66 operates as an independent downstream energy company. The company operates in three segments: Refining and Marketing (R&M), Midstream, and Chemicals. The R&M segment purchases, refines, markets, and transports crude oil and petroleum products, such as gasolines, distillates, and aviation fuels primarily in the United States, Europe, and Asia. This segment also engages in the power generation operations. The Midstream segment gathers, processes, transports, and markets natural gas; and transports, fractionates, and markets natural gas liquids in the United States. This segment markets residue gas to electric utilities, industrial users, and gas marketing companies. The Chemicals segment manufactures and markets petrochemicals and plastics. This segment produces and markets ethylene, propylene, and other olefin products; and aromatics products, such as benzene, styrene, paraxylene and cyclohexane, as well as polystyrene and styrene-butadiene copolymers.
To review Phillips' stock, please take a look at the 1-year chart of PSX (Phillips 66) below with my added notations:
1-year chart of PSX (Phillips 66) For almost the entire last 3-4 months, PSX has been stuck within a common pattern known as a rectangle. Rectangle patterns form when a stock bounces between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. PSX's rectangle pattern has formed a $60 resistance (blue) and a $55 support (red). In the past these two levels have acted as BOTH support and resistance at one time or another for the stock.

The Tale of the Tape: PSX has formed a rectangle pattern. The possible long positions on the stock would be either on a pullback to $55, or on a breakout above $60. The ideal short opportunities would be on a break below $55 or at $60.
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