Buckling Crude Stock Extends Volatile Trading

The equity ran headfirst into the overhead $44-$45 mark in recent weeks

Jun 16, 2020 at 2:28 PM
facebook X logo linkedin

Following last weeks’ announcement from the Organization for Petroleum and Energy Countries and allies (OPEC+) that revealed a production cut of nearly 10 million barrels per day through July, the energy sector has suffered. Despite this decision out of OPEC+, it still didn’t manage to offset worries of a looming increase in output for a handful of countries. In response, oil stocks have experienced a volatile journey for the second week of June, one that was in tune with Thursday’s broader market selloff.

Ohio-based oil-and-gas based issue Marathon Petroleum Corp (NYSE:MPC) has been no exception, running up a three-day losing streak on Thursday, June 11. But it wasn’t just a losing streak; MPC shed over 17% in that three-day span. Unsurprisingly then, on Thursday the shares seamlessly slid onto the short sale restricted (SSR) list, breaching their 20-day moving average, a trendline that had contained previous pullbacks for the last two months. Looking further back, on Monday, June 8, the equity ran headfirst into the overhead $44-$45 mark, the same level that offered a floor of support in mid-2019. Amidst all of this commotion, MPC is now swimming in a 41% year-to-date deficit.

CotW MPC Dailyw20MA

In the face of these technical troubles, it’s worth digging into MPC’s analyst sentiment. Of the 11 brokerages covering MPC, seven dole out “strong buy” ratings, with zero “sells” on the books. Plus, the consensus 12-month price target of $46.43 is a 25% premium to Friday’s closing perch. This is just a roundabout way of saying that if the oil stock is to encounter more trouble on the charts, it could lead to analysts jumping ship from their bullish stance, and any downgrade and/or price-target cuts could serve as additional headwinds to a stock already sensitive to global headlines.

Breaking down the crude sector in its entirety, data from Schaeffer’s Senior Quantitative Analyst Rocky White shows 27 oil and gas producing stocks sporting an average return of -27.5% in 2020, and -29% over the past 12 months. Digging deeper, 53% of those stocks hold “buy” ratings from analysts, which indicates the entire sector is ripe for a shift in analyst sentiment.

Echoing Marathon stock’s claim as a volatile performer on the charts is its Schaeffer's Volatility Scorecard (SVS) of 97 (out of 100). Specifically, this suggests MPC has been making drastic moves higher or lower since this day in 2019, a potential boon for premium buyers.

Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, June 14.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI