MRO, TSO, and WPX have each flashed a "buy" signal recently
Energy stocks
Marathon Oil Corporation (NYSE:MRO),
Tesoro Corporation (NYSE:TSO), and
WPX Energy Inc (NYSE:WPX) have all flashed potential "buy" signals. Specifically, each oil stock has recently flirted with its ascending 160-day moving average, which is a historically bullish indicator, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. On top of that, volatility readings suggest it's an opportune time to buy options on MRO, TSO, and WPX shares, which we'll investigate further below.
Marathon Stock Set to Hurdle Key Technical Level
Starting with Marathon, the stock has pulled back to its 160-day moving average four times in the past three years. Looking a week out, the shares have been higher on three-quarters of these occasions, with an average gain of 5.8%. A repeat performance would help MRO add to its already gaudy 48.5% year-over-year advance, with the shares last seen at $16.39. Another post-signal breakout would also assist the stock in taking back the 38.2%
Fibonacci retracement of its November-to-December rally, per the chart below:
Based on the current technical setup, it may be a good time to buy call options on Marathon Oil Corporation. Moreover, short-term strikes can be had on the cheap. Specifically, MRO's Schaeffer's Volatility Index (SVI) rests at an annual low of 34%; not to mention, its Schaeffer's Volatility Scorecard (SVS) of 70 suggests the stock has tended to outperform
volatility expectations in the past year.
Tesoro Shares Resuming Uptrend?
TSO pulled back after hitting an early December high near $93, but found a foothold at its 160-day trendline. It appears that's happening again, after the stock neared the long-term level yesterday. Historically speaking, this signal has sounded eight times in the last three years, and the stock has been positive in 88% of those instances in the ensuing 21 sessions -- with an impressive average gain of 9.4%. Now, at $83.82, TSO is close to the 38.2% Fibonacci retracement of its July lows and December peak, suggesting another layer of support could materialize on a push higher:
As with its sector peer above, Tesoro Corporation's short-term options are attractively priced at the moment. Specifically, the stock's SVI of 26% registers below 97% of all comparable readings taken in the past 12 months.
WPX Energy Catching a Foothold
WPX is consolidating atop its 160-day moving average, which is par for the course. Looking at all four previous instances in the last three years, the shares have advanced two-thirds of the time in the 21 sessions following the signal -- with a brow-raising gain of 16.3%, on average. In fact, it looks like the trendline could usher WPX -- last seen at $13.03 -- above the 50% retracement of its November-to-December breakout:
Given the facts above, options traders may want to target WPX Energy Inc calls. But whether calls or puts, premium on short-term strikes looks enticing, from a volatility perspective. Specifically, WPX sports an SVI of 44%, in the low 5th percentile of its annual range.
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