Large oil companies continue to lag the market as they linger into bearish territory, despite the fact that we’ve seen oil prices move back towards the high end of their recent range. While many investors continue to look at the oil and energy sector as potential long-term holdings based on their dividends, the charts are telling us another story.
Today’s three big stock charts look at the technical pictures for Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX) and Valero Energy Corporation (NYSE:VLO) and the pending warning signs that these charts may be sending us.
Exxon Mobil Corporation (XOM)
Exxon Mobil, the fifth largest oil company in the world based on revenue, has fallen into a decidedly bearish technical pattern.
XOM stock is now trading below its 100- and 200-day moving averages and literally closed right on its 50-day moving average on Thursday (to the penny). All three of these trendlines are moving lower themselves, which forecasts a continuation in this trend.
The company got little-to-no benefit from its latest earnings report,, which has only served to allow the stock price to consolidate right into the overhead resistance that appears ready to apply itself to the stock.
On the other side, Exxon Mobil shares are also walking a tightrope on a key technical support level. The stock’s 20-month moving average current resides at $81.91. A move back below this level will confirm a long-term bear market trend for Exxon Mobil and likely pull more sellers into the market.
Chevron Corporation (CVX)
Chevron shares are outperforming the rest of the energy sector, but shares are still trading almost 11% lower year-to-date. CVX shares, like its peers, are locked in an intermediate-term bearish trend, though there is a difference.
Currently, Chevron stock is locked in a battle with the $105-level, as the stock tries to muster-up the strength for a short-term rally. One of the obstacles for the shares is the 50-day moving average, which is in a relatively strong downtrend.
A break above the 50-day will give some room for CVX stock to rally in the short-term, but there’s some resistance waiting just overhead.
The resistance comes in the form of Chevron shares’ 200-day trendline and then the 100-day. These trendlines sit at $108.02 and $109.88, respectively. The 100-day trendline is in a bearish downtrend along with the 50-day, so the fight is uphill for CVX.
Chart watchers should be tuned-in to the $104-level, as this has served as chart support for the stock over the last month. A break below this round number will target a short-term price of $100 for support.
Valero Energy Corporation (VLO)
Valero Energy had been one of the stronger performers in the energy sector as the stock was able to rally relatively strongly through the second half of 2016. Now, VLO stock has slipped into the reality of lower oil prices being here to stay.
After topping out just under $72 in December, Valero shares have seen the strength in their price erode, weakening the technical picture and causing the crowd of technical bulls to start selling.
Currently, VLO stock is in the process of breaking below its 200-day moving average. This move will accelerate the downside potential for the stock, as we’ve already seen traders react to the 50- and 100-day moving averages giving way.
In a bit of a variance from the rest of the sector, Valero Energy is still trading in a long-term bull market trend, as the shares are above their 20-month moving average. That said, the stock is in the process of slipping below its 10-month moving average. This will garner the attention of the intermediate- to long-term traders and it is likely to increase the selling pressure.
Barring a move back above the 10-month, VLO stock looks to be gaining momentum for a break below $100, which would set a long-term bearish target of $80.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
