No doubt about it, Exxon Mobil Corporation (NYSE:XOM) shares have been drilled. You may be thinking of entering into a bit of exploratory buy-side operations in XOM stock, but the big picture off and on the price chart suggests otherwise. Let me explain.
The past two sessions for the Dow Jones Industrials has been troubling (to say the least) for many investors. But XOM stock has delivered new meaning to being a dog with fleas with its outsized decline of 11% and shares sinking into the red by nearly 5% year-to-date.
Adding salt to those wounds, XOM stock was already an ignominious Dog of the Dow in 2017. As well, Exxon’s rough patch with investors has been an ongoing work in progress for the last four years since the epic crash in the commodity markets.
Some might ask, “Can’t Exxon get a break?” Personally, I’m not holding my breath.
Bottom line, as bad as it’s been, based on the evidence off and on the XOM price chart, the punishment Exxon investors have experienced doesn’t look to be finished. Away from trend-lines, candlesticks, moving averages and the likes, Friday’s woeful and all-around dismal results is an affirmation the price drilling in Exxon shares hasn’t been without merit.
And if we’re to rely on the technicals for clues to where XOM stock might be headed, in this strategist’s estimation, the big picture looks equally bleak and unsupportive of any explorative buy-side efforts from investors.
XOM Monthly Price Chart
When I last wrote about XOM stock, the observation was shares had just completed and confirmed a bullish Fibonacci-based Gartley reversal pattern. That was in late October. As it turned out, the optimism was spot on, with Exxon shares rallying strongly off the low.
Of course, whether the price move up was a result of a picture on the Exxon stock chart, that’s an entirely different matter.
Looking forward, I’m concerned that technically, XOM has seen its best days or even months, for some time to come. The abrupt sell-off in shares has left XOM vulnerable to breaking its 62% Fibonacci level calculated from the Gartley’s 2015 inception after reversing and failing to clear resistance. The monthly stochastics also points to the bearish reversal as far from over.
It’s not my contention that conditions aren’t oversold in the market and XOM won’t bounce in the near-term. The last two days have proven the most challenging in a couple years for bulls and should prompt some preconditioned, buy-the-dip behavior. But I don’t see any rallies as long-lasting and anticipate much weaker prices that should include a retest of the 78% retracement level from the 2010 bottom and challenge of the Gartley low.
XOM Stock Options
Call and put options prices on XOM stock are fairly loose right now. That’s not really a surprise given the massive spike in the market’s volatility levels and tumbling stock prices. Having said that, as well as expectant investors are likely to try and catch today’s falling knife short-term, I’d wait before placing a bearish position in Exxon.
Given a day or two of bullish investors feeling blindsided, back to the feeding trough and prices having settled a bit, an out-of-the-money bear put spread such as the April $77.50/$75 put spread or a $5 wide vertical such as the April $80/$75 put combination makes sense.
Either should allow for much better price discovery operations for like-minded bears willing to proceed with a bit of caution.
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.