Energy Stocks Tank on Global Economic Concerns

Transocean LTD (NYSE:RIG), Chesapeake Energy Corporation (NYSE:CHK), Exxon Mobil Corporation (NYSE:XOM), and Schlumberger Limited (NYSE:SLB) have fallen sharply today

by Alex Eppstein

Published on Sep 18, 2015 at 2:17 PM
Updated on Jun 24, 2020 at 10:16 AM

Crude oil is down sharply and energy stocks are getting throttled as we approach the final hours of the day. In fact, energy is the worst-performing sector on the broader S&P 500 Index (SPX) today, as the Fed's decision not to raise interest rates casts a pall over the state of the global economy. Adding to the bearish bias are ongoing oversupply concerns. In terms of specific equities, four names taking it on the chin are Transocean LTD (NYSE:RIG), Chesapeake Energy Corporation (NYSE:CHK), Exxon Mobil Corporation (NYSE:XOM), and Schlumberger Limited (NYSE:SLB).

RIG has fallen precipitously, plummeting 7% to trade at $14.67. This is more of the same for a stock that's tanked nearly 20% year-to-date, and just yesterday saw its recent advance rejected by its 120-day moving average.

On Wall Street, there's little hope for a reversal in this trend. All 17 covering analysts consider Transocean LTD a "hold" or worse, and over one-third of its total float is sold short -- representing eight times the security's typical daily trading level. What's more, RIG's Schaeffer's put/call open interest ratio (SOIR) of 5.34 ranks in the 93rd annual percentile, meaning short-term speculators have rarely been more put-focused during the past year.

CHK is down 2.9% at $8.36. However, the stock is still on pace to close above its 10-week moving average for the first time since late May. Option traders aren't holding out hope, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Chesapeake Energy Corporation has racked up a 50-day put/call volume ratio of 1.71 -- just 7 percentage points from a 52-week high. Echoing this negativity, 33.2% of the equity's float is sold short, which would take over two weeks to cover, at average trading volumes. If history is any guide, it may be time to sell the underperforming shares.

XOM was last seen 2.3% lower at $72.76, and has lost more than one-fifth of its value in 2015. This decline could be setting bullish traders on edge. Specifically, Exxon Mobil Corporation's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.45 ranks in the 91st annual percentile. By contrast, short sellers are welcoming the losses with open arms. During the latest reporting period, short interest on the energy issue soared almost 36%.

Rounding out the list, SLB has shed 3.4% at $72.76, bringing its year-to-date decline near 15%, and putting the shares back below their 20-day moving average. Option bulls could be rattled, considering the security's top-heavy 10-day ISE/CBOE/PHLX call/put volume ratio of 1.45 -- which registers above 91% of similar readings, looking back 12 months. Meanwhile, there's certainly plenty of room for downgrades from analysts, considering over 70% have doled out "buy" or better opinions for Schlumberger Limited.

A Schaeffer's 39th Anniversary Exclusive!

8 Top Stock Picks for 2020

Access your FREE insider report before it's too late!


  
 
 

Partnercenter