US stock market is becoming more suspicious - but it remains bullish
The US stock markets are on a solid upward trend. When new highs are constantly being produced, there are doubters at some point. The doubt is primarily fueled by technical oscillators. Many of them are in an overbought condition. Such doubts can be confirmed with the monthly sentiment survey by the AAII (American Association of Individual Investors).
Bullish 37.9% (-0.6% on the previous month; historical average: 38, 5%)
Neutral 26.5 (-2.8% on the previous month; historical average: 31.0%)
Bearish 35.6% (+ 3.3% on the previous month ; historical average: 30.5%)
The AAII carries out a survey every month. To do this, market participants have to make a forecast for the next six months.
In parallel with the doubters, there are clear signs that the US Federal Reserve is about to raise interest rates again. This usually also slows down a stock market.
Overall, the stock market behavior should lead to a slowdown in the price increase. This is nothing new in stock market history and can even lead to a trend being extended. As long as there are doubts, there is still a lot of investable liquidity. This feeds the trend.
Image: Weekly chart of the S & P500
In the upper chart, two trend channels are drawn using pitchforks. Each pitchfork forms a trend channel based on three striking course points. This has the advantage that the typical "trend channel arbitrariness" is reduced.
The two Pitchfork trend channels point upwards and are nested at the same time. With this starting situation, the trend is constantly supplied with new buyers. Computer algorithms based on trends in particular will view any setback as an opportunity to buy.
Price and volume converge bullish
Signs of trend weakness can be seen in the price-volume behavior. In the upper chart you can see a "multi" indicator consisting of RSI and OBV. The RSI is shown conventionally and the OBV modified. The OBV has been inserted into an RSI formula and therefore has the same scale as the RSI. In this form, divergences and convergences between price and volume behavior can be recognized more easily. Pay particular attention to new highs and new lows. The OBV is usually the forerunner of the RSI.
Both indicator trends point upwards as a basic trend. While the RSI has already reached the extreme range, the OBV still shows restraint. This leads to the assumption that the market can continue to be in the extreme area without stronger sales waves.
A flourishing economy needs crude oil
Industrialized countries need large amounts of energy. Crude oil was the most important energy source for many decades. Although the consciousness of the world population tends towards clean energy, the dominant role of the crude oil is far from being broken.
Image: Weekly chart of the WTI oil ETF (USO)
The upper chart of the Oil ETF (USO) serves as a replacement for the regular oil price chart. The advantage of the USO is that it is created with a high trading volume, and typical hedging transactions, as are common with futures, are eliminated. Therefore, the USO is technically more accurate.
For months, the USO has been trading in a narrow trading range between $ 10 and $ 12. The long dwell time of the course confirms the end of the downward trend. The trend patterns within the trading range even suggest that the market is preparing for a new upward movement. The downward waves are not dynamic and contain little trading volume.
A spark is sufficient, which can probably only be triggered by OPEC to push the oil price above $ 12. Then the price would have plenty of room for the further rise.
You may be wondering why the US stock market and then the oil market were analyzed. Both markets correlate closely with Exxon Mobil's stock.
Exxon Mobil Corp. in focus - buy shares?
Does the name John D. Rockefeller (1839-1937) mean anything to you? He was the richest man in the United States at the time, and thus one of the richest men in the world. He made his fortune in oil. Standard Oil Company was his company. He drove his business forward with enormous desire to expand. Almost every means was right for him. At the height of Standard Oil, the company dominated the oil industry. Rockefeller's wealth was ruthless and not always law-abiding. In 1906, President Roosevelt decided to end the hustle and bustle by using an anti-monopoly law. The company was broken up after a long process. The Exxon Mobil Company later emerged from a number of sub-companies. ExxonMobil is also represented in Germany. Every driver should be familiar with the name ESSO.
ExxonMobil has prospered for many decades. This makes the company one of the most expensive companies in the world in terms of market capitalization.
However, sales and profits are not entirely attributable to its own performance. Depending on the oil price, the company earns more or less. The dependency is so great that it is not worth highlighting the company's special skills. The sheer size of the company is sufficient to generate sparkling profits.
Business figures:ExxonMobil201220014201520162017Revenues420714390247364763236810226094295978Results before St.78722141120313716V724211611203 134>
Figures for 2016 and 2017 are estimates Source: finanzen.net
The business figures show that ExxonMobil has only been able to present weaker business figures in recent years. ExxonMobil was able to offer constant corporate profits, even though the price of oil suffered sharp price losses. The amount of profit decreased considerably, but you always have to put it in relation to the oil price.
If the oil price gained in value, in turn, sales and profits at ExxonMobil would increase disproportionately.
Image: Weekly chart of the ExxonMobil share
Good technical prerequisites for a long trade
The initial situation for a long trade is favorable. The stock has been trading in the $ 82-92 range for a long time. However, the course so far in 2017 has been weak. There is even a relative weakness compared to the Dow Jones Industrial. However, the overall technical situation has not changed. The price is right at the support zone at $ 82.
A move is likely
The RSI and OBV show that the market is ready for a move. The OBV is in the oversold area (indicator value below 30). This indicates a short-term sell-out or exhaustion. If the oil price should only increase slightly in parallel, this will automatically give the ExxonMobil share an upward impulse.
Due to the trading range between $ 82 and $ 92, a very good risk-reward ratio can be established. If the lower support zone is broken at $ 82, it is possible to set a tight stop price below it.
In the middle of the trading range, around $ 87.30, there is a stopover, On the right edge of the chart you can see a volume profile (orange). At $ 87.30, the profile has a distinctive bulge . The bulge is caused by increased trading volume. As a result, many market participants have felt compelled to buy and sell at this price level. This is an important point in technical analysis. Very often the course comes back to this point. High trading volume acts like a small magnet. For this reason, you can also take a partial profit with you here (stopover). ExxonMobil share: WKN: 852549 / ISIN: US30231G1022 or US symbol: XOM
Target price: US $ 91.50
Interim target: US $ 87.30
Stop loss: $ 79.50
XOM Stock - is ExxonMobil's Stock a Good Buy
If you want to benefit from the short-term stock recommendation, you can buy the stock directly or with derivatives work. Note that derivatives include leverage and therefore increase the profit and loss potential. In extreme cases, a total loss is even possible.
Stop loss: The stop loss is initially set as an initial stop and has the function of a maximum loss limitation. Price target: The price target is the exit point for the forecast market movement. Stopover: When the stopover is reached, the position is in profit. At this point we take a partial profit and we sell 50% of our position. At the same time, the stop loss is adjusted to the personal entry price. This enables us to close our position without loss, even if the market later turns against us.
Risk warning: The trading values recommended by Christian Lukas are usually speculative. As an investor, you should always be aware of the risks. Despite careful research, it can happen that the forecast does not match the actual development. It is expressly warned not to spread the investment funds over a few securities. Due to the speculative risks associated with securities investments, securities purchases should generally not be financed on credit.
As a precaution, we would like to draw your attention to the fact that the financial analyzes and recommendations on Christian Lukas contained in individual financial instruments provide individual investment advice from your Cannot replace investment advisors or investment advisers. The analyzes and recommendations are aimed at readers who are very different in their investment behavior and objectives. Therefore, the analyzes and recommendations do not take your personal investment situation into account in any way.
Christian Lukas draws your attention to the fact that he may have invested in a recommended value himself.