NOG Breaks Out Monday, Reverses Tuesday

It’s not often I buy a stock on the AMEX, but you may have noticed that some oil groups have done well lately, but not all. When looking at IBD’s industry groups, which breaks down the groups into more specific plays, and which makes better sense than using the broader groups others use, you will see Oil & Gas US Exploration and Production is one of the top groups lately.


One super stock, GPOR, broke out recently, just as the turmoil in Egypt starting hitting critical mass. I missed it. So, I kept an eye on Northern Oil & Gas, Inc (NOG). A significant part of a stock’s move is determined by its industry group, so it’s always best to buy leading stocks that come from hot groups, particularly groups with other top notch stocks in terms of fundamental strength and product or service the company sells.

NOG broke out Monday, I bought it, then it slammed into reverse during today’s sell-off. This happens sometimes with breakout stocks. How do you know when they need to be dumped? Stick with your sell rules – if it falls 8% below your buy point, wave goodbye and move on. This hasn’t happened yet with NOG.

Today’s action put NOG just below the buy point and volume came in slightly below the break out’s volume. Not a sell signal yet, but a signal that raises concern, especially given the 4.5% drop in price.

Will certain oil stocks continue to be hot? Who knows. Just use price and volume action as your clue. At this point, I’m suddenly not as hot on the group.