Diamondback Energy (FANG) has been moving sideways since its breakout in December 2016. However, it is difficult to say the movement is a base. Stocks typically form bases that show sideways price movement, but FANG has been so volatile it would be generous to call the pattern a base.

Buyers and sellers seem to be slugging it out passionately. The peaks are followed by steep valleys. There is not clear trend at this time.

Momentum traders may be buying at the lows and selling at the highs. Investors who prefer a more long-term approach might be wise to see if the stock settles down before buying. To be sure, Diamondback Energy stock has always shown big moves up and down, sometimes on back-to-back days. The only way to decide if the stock is worth the wild ride is to check the fundamentals.

Over the past four quarters, operating income has moved from a loss of $27,603,000 to a gain of $87,079,000. This positive movement has been accompanied by an increase in revenues during the same period. Analysts’ earnings estimates for the company are being consistently revised upward.

In other words, there is good reason for the stock to move upward. So, why isn’t it? Why do sellers keep driving the stock back down after it rises?

The stock has tested resistance at around $114 per share three times and pulled back three times. Someone who owns the stock wants out at that price. It could be a large institution taking profits, or a money manager who thinks $114 is a good target price and that the stock cannot go much further. (See also: Support And Resistance Reversals.)

Once these sellers are gone, buyers may step in and send the stock higher. Wait for the stock to break above this resistance level on high volume. If there are one or two follow-through days, this may be a stock that is ready to rise. 

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