Energy Transfer Shares Back Test Break Out, Insider Loads Up On Shares

Energy Transfer LP ET, a top stock pick among some Redditors, is also favorited by insiders and institutions.

Although Energy Transfer doesn’t have all the typical characteristics of a short squeeze target, with a massive 2.7-billion-share float and only 3% of the float held short, 65.86% of its float is locked up by insiders and institutions.

That number may be even higher on Thursday after another insider, director Ray Washburne, added another 100,000 shares of Energy Transfer at an average price of $8.90. The purchase cost Washburne a total of $890,000.

Washburne may have timed his entry perfectly, as Energy Transfer looks set to rebound if the bullish pattern plays out.

The Energy Transfer Chart: On Wednesday, Energy Transfer broke up bullishly from a descending channel in which it had been trading since reaching a high of $11.55 on June 14.

On Thursday, the stock was trading down and testing the upper trendline of the pattern as support. When a security breaks from a pattern, it often back tests the formation for support or resistance before continuing its move in the direction of the break.

The back test was also done on low daily trading volume, which indicates consolidation. On Wednesday, just 4.49 million Energy Transfer shares had traded hands by midafternoon compared to the 10-day average of 11.99 million.

For bulls to feel confident a big bullish move is in the cards, Energy Transfer’s stock will need to make a higher high over the $9.80 area. If Energy Transfer can reach the level before trading below $8.70, it will confirm a trend change to the upside.

Energy Transfer is trading in line with the eight-day exponential moving average (EMA) but below the 21-day EMA, with the eight-day EMA trending below the 21-day, which indicates bearish indecision.

The stock is trading above the 200-day simple moving average, which indicates overall sentiment in the Energy Transfer is bullish.

• Bulls want to see big bullish volume come in and drive Energy Transfer’s stock up through a resistance level at $9.55 and then over the Aug. 13 high. If the stock can confirm an uptrend, it has room to move up toward its next resistance level at $10.41.
• Bears want to see big bearish volume come in and drop Energy Transfer back down into the falling channel and for the stock to continue trading down in the channel until it loses support at $8.70. This would confirm the stock is still in a downtrend.