Oil exploration and production giant Exxon Mobil (NYSE:XOM) is scheduled to report its latest earnings this Thursday, and its post-earnings reaction actually has the potential to move markets.
That’s because not only is XOM the largest holding by far (17.64%) of the Energy SPDR (NYSE:XLE), but it’s also the top weighting in the SPDR S&P 500 ETF (NYSE:SPY), at 2.83% as of April 19.
Thus, it’s now worth taking a look at the charts to see where the stock is nestled from a technical perspective.
Like most stocks, Exxon Mobil is up huge over the past few years. After stalling in October 2012, however, the stock has traded sideways to down since, and earlier this month it broke below the important uptrend that dates back to September 2011.
Closer up on the daily chart — while keeping that broken 2011 uptrend in mind — note that XOM continues to respect a lateral support line around the $85 mark. On April 17, the stock bounced off the support area for the third time since November, signifying the importance of the level. At the same time, as I so often point out, the more a level gets tested, the weaker it ultimately becomes as support/resistance.
The $85 level also serves as a confluence area of support because the 50% retracement of the stock’s June 2012-October 2012 rally closely coincides with $85. Below $85, by the way, not much support is to be found until the high $70s.
In other words, going into Thursday’s earnings report, the $85 area likely will be an important focus point for traders.
As there are two sides to every trade, I would be remiss not to discuss the potential upside in the stock. If we look at the daily chart of Exxon Mobil, it doesn’t take too much imagination to see a bullish wedge developing, with a resistance point (red dotted line) currently around $90.50.
Should the stock resolve to the upside, it is this resistance line I will be watching for a potential breakout … and for, at the very least, a retest of the October 2012 highs.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter here.