Oil exploration and production giant Exxon Mobil Corporation (XOM) recently, in late July, bumped up against its long-time area of resistance around the $96.00 mark.  What at the time may have looked like a stock with potential to pierce through resistance however once more established itself as the weaker of the two and proceeded to recede quite sharply over the past three weeks.  Traders that kept in mind the longer-term view of the stock, on the chart below, will have noted that the stock’s relative higher high in July versus the 2011 highs came on waning momentum as indicated by the relative strength index (RSI).  Through this lens, while the stock remains holding its intermediate term support line, the longer standing negative divergences between price and momentum indicate that beyond a near-term bounce Exxon Mobil Corporation (XOM) stands a good chance of establishing lower lows still.  To be sure, the charts of other integrated oil and gas companies such as Chevron Corporation (CVX) and BP PLC (BP) look much the same as they are immediate term oversold but haven’t yet broken intermediate term support lines.

xom multi year

The stock’s thus far 9% slide from its late July highs also confirmed those highs as a break out fake out.  Given the steep slope of the sell-off the odds at this juncture don’t favor selling the stock into the hole.  Even though better lateral support doesn’t come into play until the $85 area, those looking to sell or short the stock will likely find better (higher) levels to do so in coming days.  Ultimately, only a break below the $85 area on a weekly basis would put the stock’s medium term trend (sideways) in jeopardy, for as long as $85 acts as support and the low to mid $90s act as resistance, the stock is technically medium-term range-bound.

As a side note, given that every stock has its own personality, it is only logical that every stock acts differently around the various moving averages.  In the case of Exxon Mobil Corporation (XOM), the stock’s 50, 100 and 200 day simple moving averages have not been of much use to investors as the stock’s nine month sideways move hasn’t caused them to vary much.  Traders with a quicker hand however have found some use of the 21 day moving average, which the stock price is currently much extended below and thus asking for somewhat of a mean-reversion move higher in the near future.

xom daily

 

 

 

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