Sunoco Inc. (SUN) might prove to be a smart short-to-mid-term trade for inventors looking to take advantage of a growing economy and seasonal higher summer fuel costs.
And the timing might be right too. At the close of yesterday's trading, SUN's stock chart produced a positive MACD crossover, a technical analysis buy signal. The MACD measures the convergence and divergence of moving averages.
In other words, are the short-term or longer-term averages leading the way? When the shorter averages are winning, it's usually good for investors. One of the most powerful and opportune times to take action on a stock is when the short average crosses from below to above its longer cousin – the positive MACD crossover or the 50 day average moving above the 200 day average to name the most commonly used .
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SUN looks like it's headed to $29. If $29 proves to be a temporary stopping ground, $30-$31 is up next. Obviously, the price of oil will push and pull SUN and all oil related stocks depending on oil's daily price swings.
Liquid black gold's price looks ready to spout higher. Like our Sunoco chart, oil's short-term moving averages are passing by the longer averages. This usually sets the stage for higher prices. Eighty-four dollars will prove to be a pivot point, a close above it and $90 oil is our future, maybe $100.
The tail side of the technical analysis oil coin is if $84 holds and the price heads south. Right now oil is setting a series of higher highs and higher lows, again, usually another sign that prices could be on the upswing. Failure to set a new high would temporarily suspend the walking up steps trend and could put selling pressure on oil's price.