Shares of energy stocks in the energy sector of the S&P 500, and as represented by the Energy Select Sector SPDR (ETF) (NYSEARCA:XLE), perked up last week. As a result, shares of oil giant Exxon Mobil Corporation (NYSE:XOM) also lifted and are now flirting with a breakout move that no doubt many an investor would welcome.
Regular readers of my column know that energy stocks have been major themes for the fourth quarter. While I’m slowly getting less bullish on this theme through a multi-month lens, the past few days of bullish price action in single name oil-related stocks cannot be ignored from a trading perspective.
For some perspective, just last week on Dec. 21 I offered a bullish trade idea in this column in oil services company Halliburton Company (NYSE:HAL), which I continue to like.
Looking at the multi-year weekly chart of XOM stock we see that, even though it remains in a downtrend if looked at since the highs in 2014, it also has developed a series of higher lows again since the late-summer 2015 lows.
Particularly, the price action since the spring of this year has the look of a stock where the bears/sellers have run out of steam and the path of least resistance at least for a multi-week/month trade seems to be higher.
Through this lens, a next simple upside target comes in around the black diagonal that currently comes in somewhere around the high $80s.
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
On the daily chart, we see that the price action since the 2018 springtime a little better. Note here that the stock has largely trotted sideways since then with exception of the second-half August tantrum. This dip, however, was quickly bought and indeed proofed that the sellers did not have any lasting strength in August.
Over the past few weeks XOM stock has once again consolidated below well-defined horizontal resistance around the $84 area and it increasingly looks like a next breakout past this point is in the cards sooner rather than later.
Once XOM stock decidedly closes above the $84 mark on a daily closing basis, it could be on its way higher to a next upside target in the very high $80s.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
Check out my Daily Market Outlook for Dec. 26.
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