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SINOPEC – Not all Big Oil companies are damned

China Petroleum & Chemical Corporation, or Sinopec , is a Chinese oil and gas company based in Beijing, China. It is listed in Hong Kong and also trades in Shanghai and New York ( NYSE: SHI ).

It was previously compared to EXXON MOBIL CORP. ( NYSE: XOM ) as completely counter-trending stocks in the same sector of activity and while XOM is trending lower and made a break to the downside, SINOPEC is hitting an overhead resistance.

Should that descending trendline gives way and the previous historical $62.1 price peak be taken out then there will be no overhead price offer left and the path will be clear for the long term uptrend to resume.

The odds are in favor of this breakout to happen since the relative strength is positive and rising and there is some apparent buying strength as testified by the rising volumes of exchange.

SINOPEC weekly price chart

STRATEGY:
– Buy on a weekly close above the descending resistance trendline, or place a buy entry above historical price peak at $62.1.
– Don’t anticipate the move, i.e. don’t buy unless the above condition(s) has been realized.
– Once long position has been opened place the initial stop loss below the previous intermediate low (slightly below $50, red line on the chart).
– Hold position for the long term; stock price should easily move into the $85-90 price area (estimated profit/loss of at least 2.5:1).

Disclosure: I have no position in the stocks mentioned

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