Hi Lou: Appreciate your column. Could you give me your take on Phillips 66. I have had it since it was spun off. Thanks, John
Thanks for the assignment and your kind words. Phillips 66 operates 15 oil refineries with capacity of 2.2 million barrels a day. In addition, the company has 10,000 branded outlets and 15,000 miles of pipelines. PSX is also involved in the midstream side of the energy industry through a 50-per-cent interest in DCP Midstream LLC. Finally the organization has exposure to the specialty chemicals sector through a 50-per-cent interest in Chevron Phillips Chemical Company LLC.
The stock has been very generous to shareholders since it was spun out from ConocoPhillips in 2012. What needs to be assessed is if there is more gas in the tank? An examination of the charts will help you decide how best to manage your profits.
The three-year chart indicates that the stock topped out at a 52-week high of $70.52 in late March, 2013, and has broken support along the uptrend line and the 50-day moving average. Currently the stock is testing support along the 200-day moving average. This chart is a perfect example of applying a policy of constant surveillance on your investments. The MACD and the RSI both generated sell signals in late March, which was followed by a buy signal in mid-April, 2013, and then another sell signal in late May.
The six-month chart provides a close-up of the buy and sell signals generated by the momentum indicators. At this point, it looks like some buying has come in as the stock tested support along the 200-day moving average. The MACD and the RSI are indicating there is a trade setting up. However, you need to watch resistance along the 50-day moving average and beyond that at $64.
Given that you have substantial profits in this investment, you should consider booking some of the profits you have accumulated. The hold strategy that got you to the penthouse of profits needs a review given what has transpired in the since the spring.
Make it a profitable day and happy capitalism.