Energy Stocks Fall Victim to China's Currency Shake-Up

Chesapeake Energy Corporation (NYSE:CHK), Exxon Mobil Corporation (NYSE:XOM), and Seadrill Ltd (NYSE:SDRL) are seeing red, following China's currency decision

Aug 11, 2015 at 3:33 PM
facebook X logo linkedin

As we noted earlier, U.S.-listed Chinese stocks are getting clobbered in the wake of the People's Bank of China decision to devalue the yuan -- but they're hardly the only ones. One sector that's bearing the brunt of the news is energy, where a number of notable names are tanking -- exacerbated by OPEC's non-member production forecast. Here's a quick look at three such stocks: Chesapeake Energy Corporation (NYSE:CHK), Exxon Mobil Corporation (NYSE:XOM), and Seadrill Ltd (NYSE:SDRL).

CHK has plunged 4.8% to trade at $8.22, and has surrendered nearly 58% year-to-date. A few days ago, the shares bounced from a 12-year low of $6.85, but ran out of gas near their descending 20-day moving average. Traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been upping the bearish ante of late. Specifically, Chesapeake Energy Corporation's 10-day put/call volume ratio across this trio of exchanges is 2.84 -- just 3 percentage points from a 12-month peak. Along similar lines, almost 30% of the equity's float is sold short, equivalent to 9.3 times CHK's average daily trading levels.

XOM is faring slightly better -- down "only" 0.9% at $77.33 -- but it also touched a three-year low of $76.33 around midday. The brokerage bunch has mostly abandoned hope for the chronic underperformer, with 11 of 14 analysts doling out "hold" or worse suggestions. Similar skepticism has been witnessed among traders at the ISE, CBOE, and PHLX in recent months. Exxon Mobil Corporation's 50-day put/call volume ratio of 1.70 ranks in the 72nd percentile of its 52-week range.

Finally, SDRL has dropped 2.8% at $8.56, bringing its 2015 deficit to 28.3%. Also, recent rally attempts have stalled at the stock's 20- and 30-day moving averages. Meanwhile, short-term option traders have been put-focused. Seadrill Ltd's Schaeffer's put/call open interest ratio (SOIR) of 1.55 indicates put open interest outweighs call open interest among options in the front three-months' series. What's more, this SOIR registers near the top quartile of its annual range.


Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.

Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!




Rainmaker Ads CGI