Tech

Exxon Mobil is still not a buying opportunity

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Global oil company Exxon Mobil (XOM) fell lower Friday as crude oil futures fell about 6%. Not pretty, but the 200-day moving average rising line is not far below the market. Is this a buying opportunity or a sign that “everything is for sale”?

Let’s check.

In this XOM daily bar chart below, we can see that the price of XOM has largely moved sideways over the past four months. The longer-term trend is up as XOM is still above the rising line of the 200-day moving average, which crosses about USD 84.

Previous tests of the 200-day line in November and December were a buying opportunity, but the various moving parts – oil prices, interest rates, the dollar – have all changed significantly. Trading volume has been declining since mid-June, suggesting that investor interest has shifted elsewhere.

The On-Balance-Volume (OBV) line shows a slight decline from early June as sellers of XOM appear to be more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator crosses the zero line for a straight sell signal.

In this weekly Japanese candlestick chart from XOM below, we can imagine prices testing the rising 40-week moving average (this website does not update weekly candlestick charts until Friday’s close).

We can see that the weekly trading volume has shrunk in recent months while the weekly OBV line seems to be peaking. The MACD oscillator has been weakening since June.

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In this XOM daily point and figure chart below, we see a potential downward price target in the $72 area.

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In this weekly Point and Figure chart from XOM below, we see a price target in the $70 area.

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Bottom line strategy: XOM and other energy names were an industry to hide in during the 2022 bear market. New lows for the decline in crude oil futures could lead to further liquidation of long-term energy names, despite longer-term bullish trends. In this current period of broad market weakness, it might be better to sell some and ask questions later.

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