It’s been a tough 12 months for the Energy sector and Exxon Mobile hasn’t been immune to the pain. After topping out at $100 in July 2014 (XOM) fell almost 40%. The good news is there are signs of life in the stock price that could be signalling a trend change, at least in the near term.
The chart above shows the price decline since all time highs. Each retrace rally has been about $8-$10. Off the August lows the stock price has rallied a similar almost $10 before finding resistance. The difference here is that the stock has continued to find support at a higher low ($72) and is now looking like it might just break out to the upside.
This chart drills down to show the support and resistance going forward. It’s traded in a very narrow range for over a month between $72 and $76. A break in either direction would be the obvious tell, but I am willing to anticipate an upside breakout. Next resistance levels come in at $81 and $84.
It is important to note that the Energy sector is projected to show a steep decline for Q3 2015 in both revenues and earnings. However with prices already fallen 40% or more (equivalent to the size of the decline seen during the Great Recession) eventually value is found as the worst case scenarios are priced in. Maybe that is what we are seeing now.
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