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

by Karee Venema

Published on Aug 20, 2015 at 11:24 AM

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.

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