Noble Energy, Inc. (NYSE:NBL) finished the last trading session with a big loss of 6.21% after the announcement of the company acquiring a smaller oil and gas producer Rosetta Resources Inc. (NASDAQ:ROSE). It is a all stock and debt assumption deal, where the Rosetta shareholders would be paid 0.542 shares of NBL for each share of Rosetta.
Technically, Noble Energy, Inc. (NYSE:NBL) doesn’t show a very strong structure. A single glance at the long term chart discloses the weakness with the unmistakable crash in the last 6 months of 2014 hitting the eyes first. The stock had its first taste of bearish violence in 2008, when the entire global scenario trembled but that was followed by a nice bull market that took the stock to a new life time high. On the other hand, the 2014 crash was not a part of any global economic meltdown but a side effect of the crude oil crash.
Among the most significant technical pointers, one must note that the last crash has dragged the price below the long term support area in the band of $52-$53 and a retest of that band this year has produced a sharp rejection. Then there is the short term price action, which has created a Bear Flag pattern and the implication is clear from the name of the pattern itself. A break below $46 and $43 may trigger the next phase of the long term downtrend. The third factor would be the huge volume this week, in the downtrend. The trading volume surged to nearly 21 million yesterday, not only 5 times higher than the average daily volume of 4 million but also the highest daily volume in the last 5 years. If it implies big distribution, then the bears have a lot left in their hands.
