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May 16

Entering Long Exxon-Mobil ($XOM), Weatherford ($WFT)

If this market is to sustain its uptrend it will likely need to have some new leaders emerge from previously poor performing sectors. As we’ve discussed previously we are seeing a lot of charts in the energy sector taking shape, two of which we want to enter long this morning; Exxon-Mobil ($XOM), and Weatherford Intl ($WFT).

Long Exxon-Mobil ($XOM)

This is $XOM over the last two years on a weekly. It’s been messy at times but there’s no denying the overall trend and the most recent development, climbing back above its 10, 40-week averages and breaking that descending trendline from last year’s highs.

AlphaCapture

You can see that period in greater detail on the daily chart below. Three times it’s come back from that $85 level, the most impressive of which is the most recent, on increased volume with 8 accumulation days in the last 4 weeks. That $85 level still gives us a relatively tight stop but that may even be generous given we’re back above rising 20,50,200-day MA’s and should have no business being back at $85. A clean break through that $88-87 area may be enough to tell us that a lengthier consolidation is underway, so we can use some discretion there.

AlphaCapture

 

Long Weatherford Intl ($WFT)

Our interest in $WFT stems from the action of the last 4 weeks. It had slowly resumed its rally from the November lows, reclaiming the ground above its MA’s, culminating in a high-volume advance to its first major resistance area. Throughout it’s continued to produce accumulation days. The last week two weeks has produced a high tight flag formation, readying for a likely successful challenge to the $14 area.

AlphaCapture

The weekly chart below of the last 2 years puts the recent move in context. This has been underperforming for a long time but with a break of that descending trendline, the uptrend from the November lows is still intact and looks to have plenty of room to the upside. We may need a generous initial stop in case we get a retest of that break, just above $12 where the 200-day/40-week is, but with a resumption higher we could quickly move that up to the base of the flag around $12.70.

AlphaCapture

 

 

 

 

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