Are Chevron, Exxon, and Chesapeake in Danger of Additional Downside?

Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), and Chesapeake Energy Corporation (NYSE:CHK) have been struggling in step with crude

Aug 20, 2015 at 11:24 AM
facebook X logo linkedin

It's been an interesting week in the commodities market, and while gold is hovering around a five-week peak, crude is wallowing near six-year lows. At last check, the September-dated contract -- which expires today -- was off 0.4% at $40.63. This rout has Wall Street keeping a close eye on energy-related equities, with names such as Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), and Chesapeake Energy Corporation (NYSE:CHK) in focus.

CVX touched $80.10 earlier -- its lowest mark since September 2010 -- and was last seen down 0.5% at $80.48. Longer term, the stock has been in a steady decline since hitting its most recent high of $112.20 in late April -- off 28%, amid continued pressure from its 10- and 20-day moving averages.

Nevertheless, short-term speculators are more call-skewed than usual, per Chevron Corporation's Schaeffer's put/call open interest ratio (SOIR) of 1.04, which ranks in the 28th annual percentile. Plus, six analysts still maintain a "buy" or better rating on the shares. Should CVX continue to pan multi-year low territory, a capitulation from call players and/or upbeat analysts could translate into headwinds.

XOM also notched a notable milestone this morning, hitting a three-year low of $75.42. More recently, the shares were down 0.8% at $75.64, widening their year-to-date deficit to 18%.

In the options pits, outside of a rare pop in put volume earlier this week, the withstanding trend has been toward long calls. Specifically, Exxon Mobil Corporation's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.39 sits higher than 85% of all similar readings taken in the past year. An unwinding of these bullish bets may spell additional trouble for XOM down the road.

CHK was down 1.4% earlier, but has since moved 0.1% higher to trade at $7.35. Considering the stock has surrendered more than 72% over the past 52 weeks -- and its 14-day Relative Strength Index (RSI) is docked at 35, near oversold territory -- a near-term bounce isn't out of the question. Regardless, the security continues to hover just north of its 12-year low of $6.85, tagged on Aug. 5.

Sentiment surrounding Chesapeake Energy Corporation is mostly skeptical. For starters, the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.35 sits just 9 percentage points from a 52-week peak. Plus, 80% of analysts maintain a "hold" or worse rating. However, the average 12-month price target of $11.48 stands at a 56% premium to current trading levels, meaning a fresh round of price-target cuts could be on the horizon.

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 calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI