8/16/2017 – Exxon Mobil (XOM) Stock Charts Re-Analyzed
It's time to re-analyze the Exxon Mobil (XOM) stock charts.
Previously, I had written about how I thought oil prices were going to be "lower for longer". With those "lower for longer" oil prices, I anticipated a longer-term pullback for Exxon Mobil's (XOM) share price. My previous article can be accessed quickly here "2/25/2017 – Exxon Mobil (XOM) & Lower for Longer".
In that February article, I mentioned that XOM's share price could be headed towards the $85 price level before it continues its correction to the downside. Well, that appears to be exactly what happened.
With oil inventories rising over the last couple of months, I thought I should go back and double check XOM's stock charts to try to confirm that my "lower for longer" oil price outlook is still intact. Lower oil prices should correlate with lower share prices for Exxon as margins get pressured.
Exxon Mobil (XOM) Stock Charts Re-Analyzed
This first chart is a 20 year monthly candlestick chart for Exxon Mobil (XOM). There are 2 long-term trendlines on this chart. XOM's share price has broken through both of those supporting trendlines. With increasing selling momentum according to the MACD Histogram and a breach of the $78 support area, XOM's share price appears headed for at least the $71 price level.
In my February 2017 article linked above, I made this comment after analyzing the Exxon Mobil (XOM) stock charts:
What is the next long-term price target if the $72 price does not hold as support? That would be the black 100% Target Line, or the $57.34 amount. These are possible longer-term price targets for the downtrend.
This appears to be a longer-term correction that you definitely do not want to get in too early. Both the $72 and $57.34 price targets I calculated previously are still in play. This downtrend is continuing to play out and develop. Do not be aggressive trading this stock to the upside until at least the $71 - $72 price level is closer to being tested.
Why do you not want to be too aggressive? The 100% Target Line from the red Fibonacci Extension Tool is the most likely price target for a reversal of XOM's downtrend. The $71 price level will probably just offer a rebound trade during the course of this correction.
XOM - Short Opportunity?
While I typically do not like recommending that one shorts a stock, any push back towards the $80 price level could be an opportunity to take a small short position.
The goal of any short position taken would be to repurchase your sold shares back around the $60 price level.
One thing is for certain, if you do trade stocks "on the short side" make sure that you always have a stop-loss in place.
Consider covering part of the short at the $71 - $72 price level in case XOM's share price rebounds aggressively from the support area.
I've read that it is becoming even cheaper to extract the oil from the shale now. If that is the case, look for my "lower for longer" theory to continue playing out.
Gas is becoming cheaper to produce and cars are also more efficient. I definitely don't mind filling up my Chevy Tahoe as much when gas prices are in the $2 - $2.50 area. Those prices are much better than the $4+ prices from back in 2007 - 2008.
XOM - Downtrend Confirmed
This 5 year weekly candlestick chart confirms XOM's current downtrend and also shows the $71 and $58 price targets in a little more detail. The red Fibonacci Extension Tool calculated both of these price targets. The previous bottom of $66.55 is also a natural support area.
A scale-in purchase and/or a trading opportunity most likely exists in the gray shaded box. A purchase to go long in that area could see a 10-15% upside move before the downtrend commences again.
However, if XOM's MACD Histogram breaches its trendline as selling momentum starts to increase, then consider waiting on the $71 purchase. Only consider the $71 - $72 purchase if the MACD Histogram reflects decreasing selling momentum at the time.
If that is not your sort of trade, then consider just waiting until the downtrend is fully over. It may be a little while for that to happen so a "set it and forget it" alert may be in order. Set a $72 price alert for XOM. Re-analyze and then consider a purchase when its share price sets off the alert.
Exxon Mobil (XOM) Stock Charts Summary
After reviewing some Exxon Mobil (XOM) stock charts, I figure the best course of action is to just set an alert for when its share price drops below the $73 price level. That is slightly higher than the $71 - $72 price level mentioned above but that may also give you a little time to analyze any potential reversal or to stock by the Idea Chamber and drop me a request to do so.
My lower-for-longer oil prices prediction continues to play out. If you are wanting to add some energy stocks to your portfolio, long-term investors would be advised to consider some shares around the $66 price level down to the $58 price level. But that opportunity may still be many months away.
Shorter-term investors and traders may consider going long around the $71 price level for a quick 5-10% upside gain.
But rather than messing around with stocks like this, set an alert and look for better opportunities. There are thousands of publicly traded companies out there. I am sure there are several companies that have better looking stock charts than Exxon Mobil.
Good luck trading.