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The big oil stocks stopped going up in price about a month ago — even though the price of crude continued higher. Typically, the underlying commodity and the stocks in that sector tend to trade the same way.
It’s peculiar that, in this case, the group so far has failed to keep rising even as the major equity indexes keep rallying. So…that’s crude higher and stocks in general higher, but oil stocks can’t keep up?
What is the story? Here’s the benchmark crude oil price chart:
Crude oil price chart daily, 7 5 20.
You can see plainly the nice gap fill of the sudden March selling. The main thing now is that the daily closing price of oil is higher now than it was at the beginning of June.
Note how the negative divergences are clearly developing on the relative strength indicator (RSI) above the price chart — and on the moving average convergence/divergence indicator (MACE) below the chart. Crude did take a smallish dip during June but it’s gone higher into July.
The Exxon Mobil
Exxon Mobil daily price chart, 7 5 20.
The stock rallied off the March lows and continued with a peak of 55 in early June before selling off again. Look at how different this is than the chart for crude oil itself. The price has not taken off again. Exxon Mobil stock buyers are holding back despite the general strength in the underlying commodity.
The Chevron
Chevron daily price chart, 7 5 20.
It’s the same basic pattern as the Exxon Mobil chart: a relatively substantial rally coming off of the March bottom that makes it all the way back to an early July peak of about 103. Then, the stock sells off into July as the previously steady buying just dries up. Chevron’s already back into the Ichimoku cloud which is about to turn from green back to red.
The Occidental Petroleum
Occidental Petroleum daily price chart, 7 5 20.
You can how the March gap down is filled (or mostly filled) with the rally into the early June peak that came on good volume. Then, unlike crude itself, the big oil company can’t get back up to the recent high. This, even as stocks in general continue to rally, especially the NASDAQ-100.
It’s almost as if those who buy (or, lately, don’t buy) the major energy company stocks don’t quite believe the crude oil price chart. If you study the patterns, you have to ask yourself: have the big oil stocks peaked?
A lot of front page factors are at work here: the coronavirus pandemic, the Presidential campaign, the seasonality of the July 4th to Labor Day calendar. It’s a regular witches brew right now for energy market participants and the charts of price movement are noticing.
I do not hold positions in these investments. No recommendations are made one way or the other. If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.
