Chevron Stock Could Reclaim Former Highs

CVX could benefit from a shift in sentiment in the options pits

Deputy Editor
Jun 14, 2022 at 1:09 PM
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Oil and gas concern Chevron Corporation (NYSE:CVX) is seeing its shares pullback from a June 8, all-time high of $182.40, now having lost 5.5% in the last week. In addition, Chevron stock is slightly underperforming the Energy Select Sector SPDR Fund (XLE), a market-cap-weighted index of U.S. energy companies trading on the S&P 500 Index (SPX). Investors shouldn't fret, however, as the former equity has just dipped toward a trendline with historically bullish implications. 

Specifically, Chevron stock just landed on a study from Schaeffer's Senior Quantitative Analyst Rocky White after pulling back to its 80-day moving average. Per White's study, the equity has seen five similar pullbacks over the past three years, and finished higher in 60% of the circumstances, averaging a 5.6% gain. From its current perch of $169.53, a move of similar magnitude would put CVX just above $179 -- just off of its aforementioned highs.  

CVX Chart June 14

A round of upgrades could give Chevron stock a boost as well. Of the 16 analysts in coverage, seven say "hold" or worse.

A shift in the options pits could also put wind at the stock's back, as traders have moved in favor of bearish bets in recent weeks. CVX's Schaeffer's put/call open interest ratio (SOIR) of 1.0 stands higher than 80% of readings from the past year -- indicating short-term options traders have never been more put-biased in the past 12 months.

What's more, the stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 92% of readings from the past year.

 

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