Stocks continue to trade like a wet noodle near the unchanged line on Monday morning as investors remain indecisive heading into Election Day. But that isn’t to say there isn’t action to be seen elsewhere.
Crude oil and energy stocks are being hammered on a “no deal” result out of the OPEC meeting in Vienna — capping months of on-again/off-again hype for a possible supply-freeze deal. This time, a deal featuring a decline in Saudi output was teased in September, but broke down amid ongoing bullheadedness from the Iranians and Iraqis over their output levels.
Furthermore, there is no evidence that non-OPEC members such as Russia are interested in joining in. Why would they? It’s a classic prisoner’s dilemma: Better to let the other guy cut output and keep yours the same. Further discussions were pushed back to November, keeping the “hint-and-tease” act we’ve seen since February alive a little longer.
But for now, the breakdown in crude oil prices is resulting in some serious selling pressure on energy sector stocks. Here are five oil and gas names to avoid or play for short-side profits:
Oil Stocks to Watch: Exxon Mobil Corporation (XOM)
Exxon Mobil Corporation (NYSE:XOM) shares are being smashed down and out of an ultra-tight two-month trading range to drop back below its 200-day moving average.
Investors are responding negatively to a series of analyst downgrades following a disappointing third-quarter earnings report: The company reported earnings of 63 cents per share (three cents ahead of estimates), but revenues fell 12.9% from last year and missed expectations.
Edge Pro subscribers are enjoying a 135% gain in the Nov $86 XOM puts added on Oct. 26. The company will next report results on Jan. 31 before the bell. Analysts are looking for earnings of 82 cents per share on revenues of $67.6 billion.
Oil Stocks to Watch: Chesapeake Energy Corporation (CHK)
Chesapeake Energy Corporation (NYSE:CHK) shares are dropping out of a two-month trading range after falling below critical support near the $6-a-share level.
The breakdown comes despite an upgrade from analysts at RBC Capital Markets touting a lower cost structure and improved profitability outlook over the next few years. The drop puts the total decline from the September high at nearly one-third.
Edge Pro subscribers are enjoying a near 60% gain in their Nov $6 CHK puts since they were added on Oct. 27. The company will next report results on Nov. 3 before the bell. Analysts are looking for a loss of four cents per share on revenues of $1 billion.
Oil Stocks to Watch: Murphy Oil Corporation (MUR)
Murphy Oil Corporation (NYSE:MUR) shares have fallen below critical support at the 200-day moving average, a level that reversed bouts of weakness in August and again in September.
This sets up a possible breakdown from a tight seven-month trading range. Already shares have suffered a 30%-plus decline from their late April high.
The company will next report results on Jan. 25 after the close. Analysts are looking for a loss of 17 cents per share on revenues of $511 million.
Oil Stocks to Watch: Diamond Offshore Drilling Inc (DO)
Diamond Offshore Drilling Inc (NYSE:DO) shares are threatening to fall out of a month-long consolidation range as support near $16.50 is tested — setting up a retest of critical support near $15.
The drop back below the 50-day moving average represents a resumption of a downtrend started in July that has already seen shares lose nearly 40%.
The company reported mixed results before the bell on Monday, with earnings of 10 cents per share beating estimates for seven cents, but revenues were down 43% from last year to miss expectations.
Oil Stocks to Watch: Hess Corp. (HES)
Hess Corp. (NYSE:HES) shares are on the slide again, dropping away from its 200-day and 50-day moving averages as the downtrend that started in April is resumed.
The oil and gas exploration and production company has already seen shares lose some 23% over this time, setting up a retest of the September low near $46.
HES reported mixed results on Oct. 26, with earnings of $1.12 per share beating estimates by 12 cents, but revenues missing expectations and falling 29% from last year.
The company will next report results on Jan. 25 before the bell. Analysts are looking for a loss of $1.06 per share on revenues of $1.4 billion.