Exxon Mobil $XOM Is Breaking Out!

| February 18, 2016 | 0 Comments

oil and gasExxon Mobil $XOM Is On A Roll…

Bulls are pushing back in the oil market…

Word of an output freeze amongst the world’s largest oil producing countries sent West Texas Intermediate (WTI) spiking 8% in yesterday’s trading session.

While the development is certainly a step in the right direction, it won’t immediately solve the oversupply issue plaguing the global crude market.

However, the apparent agreement between Russia and various OPEC producers could stabilize the price of oil.  In other words, the remarkable and vicious downtrend of the past year and a half may finally come to a close.

That prospect has shares of top-tier oil producers rallying as value investors scramble to add them to their portfolios on the cheap.

Take Exxon Mobil $XOM for example… 

The world’s largest oil company is up strongly the past few days.  In fact, at yesterday’s closing price of $82 a share, $XOM is up 2.4% on the week and 6.1% on the year.

You read that right, $XOM is one of the few oil companies with positive price performance in 2016.  This is one of the reasons I suggested adding the company to your energy portfolio in late January.

While the recent gains in $XOM are nice, here’s what really has me sitting up in my chair… 

Exxon Mobil $XOM is breaking free of its downtrend

As you can see from this long-term weekly chart, $XOM is exhibiting a number of important bullish technical developments.

First of all, shares recently failed to test the capitulation bottom set in mid-2015 (purple lines).  This is a great sign that long-term momentum is shifting back in favor of bulls after many months of control by bears.

That’s not all…

You’ll also notice $XOM used the downtrend (red line) from the 2014 highs as a launching pad in early 2016.  That’s the second sign that the bottom may officially be in for $XOM, as well as the price of WTI.

Finally, the green line in the chart above is the last big technical barrier to higher prices for $XOM.  While bulls may not be able to break this zone on the first attempt, it’s likely this technical resistance area falls over the next few months.

Bottom line…

Talk of an output freeze amongst the world’s largest oil producers is brightening the hopes of energy market bulls.  However, I still recommend you avoid most of the small- and mid-cap oil and gas exploration space due to bankruptcy risks.

Instead, focus on best of breed producers with stable balance sheets like $XOM and Chevron $CVX. 

Until Next Time,

Justin Bennett

BIO:  Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com.  With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them.  Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.

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Category: Technical Analysis

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.