Exxon Mobil Corporation (NYSE:XOM) shares closed Tuesday at a fresh 52-week low of $78.04. XOM stock has been dead money for six months, but the past week’s slip finally pushed it into oversold territory again. And that has alarm bells going off with my bottom-fishing radar.

Energy stocks are in the midst of a terrible 2017. Consider, for instance, the Energy Select Sector SPDR (ETF) (NYSEARCA:XLE), which is the undisputed king of energy-related funds. Year-to-date, the fund is down 15.7%. Obviously, that’s substantial weakness, but it’s even worse when viewed on a relative basis. Remember, the S&P 500 is on its way to a banner year, already rising 10.3%. Compared to that, XLE has been an outright dumpster fire.

Forget climbing less than the broad market; the XLE has been heading in the exact opposite direction. It’s been a downright inverse ETF this year, much to the chagrin of shareholders of energy names.

To fully appreciate the depths of XLE’s descent — and then understand the case we can make for a contrarian bull play in XOM stock — a brief review of the charts is in order.

The Energy Sector Has No Soul

Take a look at the accompanying daily chart complete with 20-day, 50-day and 200-day moving averages.

Each moving average is descending showing the bears’ dominance across all time frames. Last month’s recovery attempt had merit but ultimately failed. It’s a darn shame too because buyers definitely had a foothold and could have staged a straight up trend reversal.

Since topping out at $67.13, XLE has fallen 5% in a straight line. That may not sound like much, but for a diversified fund to suffer a continuous decline of that magnitude is significant. It’s certainly sufficient to carry the Stochastics indicator well into oversold territory. In fact, we’re seeing the lowest such oversold reading for the Stochastics in years.

It has been very rare not to see at least some type of short-term rally when such signals were flashed in the past.

I also like how the energy sector staged a late-day comeback Tuesday, finishing above an old support level. This undercut, though minor, could be the start of the snap-back if buyers press their advantage.

Exxon Mobil Is Worthy of Bottom-Fishing

Exxon Mobil constitutes over 20% of XLE, so it should come as no surprise that their charts are birds of a like feather.

For example, XOM stock is down 13.5%, which is virtually mirroring the XLE’s 15.7% year-to-date decline. Exxon is submerged beneath all its moving averages with resistance aplenty looming overhead.

But while the stock has been entrenched in a downtrend for the past eight months, it has experienced a number of rallies that have provided profits to tactical buyers willing to ring the register quickly.

That is what I have in mind for today’s trade — a short-term bull play designed to benefit once XOM stock finally snaps back.

Consider the past five oversold signals in the Stochastics, for example. Every single one delivered a rebound in price. Though this time could be different, the odds suggest otherwise. Plus, we can use the options market to increase our chances of success further, even if Exxon Mobil drops a few days more.

How to Trade XOM Stock

My method of choice for bottom-fishing is always selling puts. It allows me to build a wide profit range giving plenty of margin for error.

The one missing link with Exxon’s setup is the lack of implied volatility. Because earnings was recently released, Exxon’s implied volatility rank has dropped down to 20%. It’s not a deal breaker, mind you, but more premium would have been ideal.

Sell the Sep $77.50/$72.50 bull put spread for 68 cents or better. Since this is a counter-trend play, I suggest exiting swiftly into any pop in Exxon Mobil stock. Look to buy back the spread around 30 cents ASAP. The cost and max risk for the spread is $4.32.

As of this writing, Tyler Craig held no positions on any of the aforementioned securities. Want to learn how to master the art of option selling for high-probability cash flow? Check out Tyler’s recently released video series through Tackle Trading on how to systematically sell iron condors for monthly income.