While the broad U.S. stock market continues its sideways zombie walk near 18,000 in the Dow Jones Industrial Average — which has been the status quo for three years now — there is excitement developing in other areas. I’m talking about energy, which has seen prices oscillate all year in response on on-again, off-again rumors of a possible OPEC supply freeze deal.
Last month, the Saudis seemed to acquiesce to the Iranians to get a deal done (pledging to cut its own output to accommodate Tehran). But Iraq and the Russians are balking now, dimming hopes of a deal.
On Sunday, Iraqi oil minister Al-Luaibi said his country should be exempt from any OPEC production cuts because of its war with the Islamic State group. Tuesday morning, an unnamed Russian official was cited as saying his country wasn’t supportive of an output cut.
I recently recommended subscribers consider short exposure against crude oil with West Texas Intermediate looking vulnerable to a downside move here. Specifically, Edge Pro members added November puts against the United States Oil Fund LP (ETF) (NYSEARCA:USO).
Just days before a number of Big Oil stocks are set to report earnings, energy equities are looking toppy. Here are three blue-chip stocks at risk:
Big Oil Stocks to Watch: Exxon Mobil (XOM)
Exxon Mobil Corporation (NYSE:XOM) has spent the past four months hovering near the $88 level with a short but harrowing excursion below its 200-day moving average in September for the first time since early February.
Shares came off their high in July after reporting weaker-than-expected earnings on a 22.2% drop in revenues, which also missed expectations.
The company will next report results on Oct. 28 before the bell. Analysts are looking for 58 cents per share on revenues of $60.1 billion.
Big Oil Stocks to Watch: Chevron (CVX)
Chevron Corporation (NYSE:CVX) shares have been sliding sideways since April as the energy price rebound out of the February low stalled out. Shares have dipped back below their 50-day moving average, setting up a test of critical support near $98.
The company will report results on Oct. 28 before the bell. Analysts are looking for earnings of 41 cents per share on revenues of $31.3 billion.
Back in July, the company reported weaker-than-expected revenues that reversed some of the excitement in the stock as the realities of still-low oil prices became apparent. Company CEO John Watson said the results lower energy prices and “our ongoing adjustment to a lower oil price world.”
Big Oil Stocks to Watch: ConocoPhillips (COP)
ConocoPhillips (NYSE:COP) shares have been drifting lower since April holding in a range in the lower-$40s. Watch for another drop below the 200-day moving average as resistance near $43 reasserts itself. Back in July, the company reported a top- and bottom-line miss on a 36% drop in revenues.
The company will report earnings on Oct. 27 before the bell. Analysts are looking for a loss of 69 cents per share on revenues of $6.5 billion.