Chevron Stock Could Remain Strong, Says Signal

Several layers of technical support are in place

Digital Content Manager
Dec 5, 2022 at 1:31 PM
facebook twitter linkedin

Oil prices have been on the rise lately amid the Organization of Petroleum Exporting Countries and its allies' (OPEC+) decision to maintain their output targets, with the organization agreeing to cut by 2 million barrels per day (bpd) from November and through 2023. Meanwhile, the Group of Seven (G7) plus Australia finally agreed to cap seaborne Russian oil at $60 per barrel last week. While the glut of headlines have created a bit of volatility (West Texas Intermediate crude futures were last seen back below the $80 mark after trading as higher as $81.12 per barrel earlier today), energy stocks have managed to remain near their October highs. 

Chevron Corporation (NYSE:CVX), for instance, is cooling this afternoon, last seen down 2% at $177.49. However, any pullbacks the security has seen during the past couple months have managed to find support near the $177 level. What's more, the stock's 40-day moving average has stepped in as support. This trendline is important because similar pullbacks have resulted in upbeat monthly returns in the past. 

According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, CVX has seen seven similar pullbacks during the past three years. One month after these signals, the equity was higher 71% of the time, averaging a 5% return. A similar move from its current perch would put CVX at $186.36, closer to its record highs near the $189 level. 

cvx dec 5

Despite its 51% year-to-date lead, CVX is just on the cusp of being "oversold." This is per its 14-day Relative Strength Index (RSI) of 38. In other words, a short-term bounce could already be in the cards for the energy name. 

An unwinding of pessimism could also provide tailwinds. The stock sports a Schaeffer's put/call volume ratio (SOIR) of 1.18, which sits higher than 96% of readings from the past year. In other words, short-term options traders have rarely been more put-biased. 


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners