The blue chips have historically struggled after Memorial Day
Oil prices are pulling back from three-year highs this week, following yesterday's surprise jump in domestic crude inventories, and amid concerns that the Organization of the Petroleum Exporting Countries (OPEC) could decide to boost output next month. Against this backdrop, several energy stocks are taking a breather, and blue chips Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) could be facing some short-term seasonal headwinds as well.
CVX Stock Set for Back-to-Back Down Weeks
Chevron stock was last seen 1.9% lower at $126.25. The equity is pacing for a second straight weekly drop -- something we haven't seen since March -- and is set to close beneath its 20-day moving average for the first time in over six weeks. Just last week, CVX shares peaked above $131, coming within a chip-shot of January's three-year high.
What's more, Chevron stock could endure a third weekly loss next week, if history is any indicator. Over the past 10 years, CVX has been one of the worst stocks to own during Memorial Day week, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. Specifically, the Dow stock has averaged a holiday-week loss of 1.35%, and has ended the week higher just 10% of the time.
Should CVX extend its slide, a mass exodus of option bulls could translate into additional headwinds for the blue chip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open more than four Chevron calls for every put in the past two weeks. The 10-day call/put volume ratio of 4.09 is in the 98th percentile of its annual range, pointing to a much healthier-than-usual appetite for bullish bets over bearish lately.
Likewise, a continued drop could spook some analysts. Currently, CVX boasts 13 "strong buy" endorsements, compared to three lukewarm "holds."
XOM Shares Could Breach Key Chart Level
Exxon Mobil stock is down 2.1% to trade at $80.46. Earlier this month, as oil prices rallied, XOM popped above its 320-day moving average for the first time since early February, before the equity was in the throes of a post-earnings tailspin. Today, however, the Dow stock is set to close beneath that trendline, which is in the same vicinity as a 50% Fibonacci retracement of XOM's drop from late January to its April lows.
Aside from CVX, Exxon is the only other Dow stock on our list of worst Memorial Day week performers. The shares have finished the week higher just once in 10 years, and averaged a loss of 1.76%.
Again, should XOM extend its recent pullback, several option bulls could be shook. The stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.17 is in the 79th percentile of its annual range, suggesting traders have picked up Exxon Mobil calls over puts at an accelerated clip in the past two weeks.
Unlike Chevron, however, Exxon isn't adored by analysts. The security sports just three "buy" or better ratings, compared to 11 "hold" or worse recommendations.