The Energy Stock to Avoid Next Quarter

Exxon Mobil is facing off against two seasonal trendlines

by Patrick Martin

Published on Jun 28, 2019 at 11:35 AM

Energy icon Exxon Mobil Corporation (NYSE:XOM) is about to lock up its best month since October 2015. However, heading into July and the heat of the summer, XOM could be headed for a pullback, if history is any guide.

More specifically, XOM is one of the worst SPX stocks to own in July, looking at historical returns over the past decade. To make the list -- cultivated by Schaeffer's Senior Quantitative Analyst Rocky White -- stocks had to have at least eight years' worth of returns. Exxon Mobil has racked up an average loss of 0.5%, and has ended July higher less than half the time.

But to make matters worse, XOM is also worst stocks to own in the third quarter. According to another list compiled by White, the security has ended the three-month stretch higher just 40% of the time over the past 10 years, and has averaged the fourth steepest loss of all eligible stocks, at 2.2%. Exxon Mobil is the only energy stock to find itself on both lists. 

At last check, XOM was up 0.5% to trade at $76.02. After racing up to the $83 level in April, Exxon stock then pivoted lower, breaching the $71 area to start June. And while this month was kind to the shares, breakouts have been contained by their 200-day moving average.

Daily Stock Chart XOM

For anyone looking to bet on XOM's summer months, options are an intriguing vehicle. The stock's Schaeffer's Volatility Index (SVI) of 18% is at 20th percentile of its annual range, suggesting short-term options are pricing in relatively low volatility expectations for the underperformer.

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