UNITED STATES OIL FUND IS TESTING SUMMER HIGH -- WHILE ENERGY SPDR TESTS AUGUST HIGH -- ENERGY LEADERS INCLUDE CONOCOPHILLIPS, HESS, AND MARATHON OIL -- EXXON MOBIL AT EIGHT-MONTH HIGH
UNITED STATES OIL FUND NEARS THREE-YEAR HIGH... The price of crude oil has reached a critical chart juncture. Chart 1 shows the United States Oil Fund (USO) in the process of testing its early July peak. A close through that barrier would put the USO at the highest level in three years. If and when that happens, energy stocks should respond in a positive fashion. Several of their individual chart patterns suggest investors are already betting on higher energy prices.
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Chart 1
ENERGY SPDR IS TURNING UP... The daily bars in Chart 2 show the Energy SPDR (XLE) trying to clear its late August peak which would turn its short-term trend higher. The XLE is also moving further above its 50-day average (blue line). It bounced off its 200-day line twice over the last month which kept its long-term uptrend intact. The solid line overlaid over the price bars is a relative strength ratio of the XLE divided by the S&P 500. The falling line shows energy undperformance between May and August. But the relative strength ratio is starting to rise during September.
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Chart 2
CONOCOPHILLIPS, HESS, AND MARATHON OIL ARE ENERGY LEADERS... Three standout performers in the oil patch are shown below. The weekly bars in Chart 3 shows ConocoPhillips (COP) nearing a challenge of its 2014 peak near 77. Its relative strength ratio (solid line) is also rising. The weekly bars in Chart 4 show Hess nearing a new three-year high. The stock recently achieved a bullish breakout by rising above its late 2016 peak near 63, which put the stock at the highest level since 2015. Its relative strength ratio (solid line) is also rising. The weekly bars in Chart 5 show Marathon Oil (MRO) consolidating in a trading range after achieving a bullish breakout during the spring. Technical odds favor that new uptrend continuing.
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Chart 3
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Chart 4
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Chart 5
EXXON MOBIL HAS POSITIVE LONG-TERM PATTERN... The daily bars in Chart 6 show Exxon Mobil (XOM) rising to the highest level in nearly eight months. That qualifies the stock as an energy leader as well. Its longer-range chart also looks promising. The monthly bars in Chart 7 show XOM hitting a peak during 2014 and basically trading sideways then. That period of flat trading, however, started with a plunge in the price of crude oil (solid line) which also started during 2014. But the price of oil is now rising, which should be more supportive to the energy stock. The monthly price bars for the stock since 2014 also have the look of a bullish "ascending triangle" which is usually resolved on the upside. The latest price bar to the right shows XOM moving up to test overhead resistance along its 2016/2018 highs. The overall shape of the four-year price pattern suggests that an eventual upside breakout is likely. But that will depend largely the price of crude oil rising as well, which is the case with energy stocks in general. [Cautionary Note: OPEC and Russia are meeting this weekend to discuss current output levels, which could impact oil trading next week.]
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Chart 6
