Cabot Oil & Gas Corporation (NYSE:COG) is a stock I highlighted in summer webinars as a potential trade to the long side. It would require patience and, hence, it's a stock to have on a watch list.
The issue, as always, is that word patience, something traders and investors find hard to muster at times. But, as is often the way, it generally does pay off. And this is an even greater truism when a stock is in an accumulation phase as the market makers build their inventory in preparation for the development of the campaign higher, and often preceded with a test.
COG is a good example of the patience required. On the daily chart, the key level of resistance was clearly defined at just shy of $18 per share, with the red dashed line of the accumulation and distribution indicator as the price broke away from the VPOC (the yellow dashed line). The breakout through $18 per share and beyond moved COG into a low volume and on towards $23 per share, with only yesterday’s sharp move lower helping to take the gloss off the strength of bullish sentiment.
The time cycle of accumulation is not hard to understand. The stock price has fallen hard and fast and, perhaps, over an extended period. The market makers have to absorb all the selling pressure. If and until it is removed from the market, a new campaign is unlikely to start since what they do not want is for sellers to reappear and stall the campaign. So it is a nice example of how, with COG, patience has been rewarded.