Formed by the merger of Exxon and Mobil, ExxonMobil Corp. (XOM) is an industry leader in the energy and petrochemical sectors, producing about 3% of the world’s oil. This makes XOM a perfect proxy for our review of big oil, where we’ll use SIA's unbiased, rules-based approach versus a gut-based one. We start with the SIA Relative Strength Position chart, showing XOM's trading performance in the S&P 100 Index. While stocks at the bottom can rise, SIA analyzes equities through the lens of opportunity cost, which is indicating that XOM is unfavored to tons of better opportunities. Currently, XOM is in the red "Unfavored" zone of this report, and our trend line, drawn in black, indicates a decline in relative strength since its peak in 2022-2023. The weekly candlestick chart reveals three distinct periods highlighted by ovals: the trump oil-friendly days in the first red oval, the run-up post-Soviet invasion in green, and what appears to be another peaceful era being priced in (red oval). Notably, there has been a decline in volume since the onset of the Russian special operation in Ukraine.
Turning next to our favorite chart, the point and figure (P&F) chart effectively identifies support and resistance levels. X columns indicate buyer activity, while O columns show selling pressure. Unlike traditional charts, P&F charts only update with price changes, ignoring time. This focus allows investors to concentrate on significant price movements without distractions from static prices. Here, we’ve added proprietary SIA color coding to indicate its matrix position; XOM, previously favored (green) during the war, has now turned unfavored (red), even as the share price completes several double and triple tops, suggesting a P&F bullish catapult. These conflicting signals are a head-scratcher for unbiased analysts, prompting us to set up alerts on the SIA platform for any moves in our main coach. As we sit on the sidelines for the oil trade, we will watch this global proxy, XOM, for support initially at $114.40 (3-box reversals), and at $105.69 and $95.73, representing natural supportive areas, with the noteworthy $100 psychological level taking center stage. This is against the backdrop of an SMAX score of 8 out of 10, a shorter-term measure compared to other asset classes rather than our primary reading against all stocks.
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