Oil exploration and production giant Exxon Mobile Corp (XOM) is scheduled to report its latest earnings this Thursday. Given the stock has the largest weighting in the SPDR S&P 500 ETF SPY with 2.83% as of April 19th, it’s reaction post earnings will have the ability to move the broader tape, or depending on its percentage move, at least the energy sector.
As it relates to the energy sector, the company is also the largest holding in the energy sector, i.e. 17.64% of the SPDR Energy ETF XLE.
Thus it’s now worth taking a look at the charts to see where the stock is nestled from a technical perspective.
Like most stocks, Exxon Mobile Corp (XOM) is up huge over the past few years. After stalling in October 2012 however the stock has traded sideways to down since, and earlier this month (April) it broke below the important up-trend that dates back to September 2011.
Closer-up on the daily chart, while keeping the above broken 2011 up-trend in mind, note that the stock continues to respect a lateral support line around the $85 mark. On April 17th the stock bounced off the support area for the third time since November, signifying the importance of the level. At the same time, as I so often point out, the more a level gets tested the weaker it ultimately becomes as support/resistance. The $85 level also serves as a confluence area of support because the 50% retracement of the stock’s June 2012 – October 2012 closely coincides with $85. Below $85, by the way, not much support is to be found until the high $70s.
In other words, going into Thursday’s earnings report the $85 area will likely be an important focus point for traders. As there are two sides to every trade I would be remiss not to discuss the potential upside in the stock. If we look at the daily chart of Exxon Mobile Corp (XOM) it doesn’t take too much imagination to see a bullish wedge developing, with a resistance point (red dotted line) currently around $90.50. Should the stock resolve to the upside it is this resistance line I will be watching for a potential breakout and for at the very least a re-test of the October 2012 highs.