CVX and XOM have plenty of optimism priced in, despite the Dow stocks' technical troubles
Earnings season has kicked into high gear, with positive reactions for several blue-chip stocks -- including
Boeing and
Verizon -- helping send the Dow to record highs this week. Oil majors
Chevron Corporation (NYSE:CVX) and
Exxon Mobil Corporation (NYSE:XOM) are slated to report earnings tomorrow morning. There's plenty of optimism priced into the embattled energy shares ahead of the scheduled events, too, making CVX and XOM potentially prime targets for
bearish stock trades, according to data from Schaeffer's Senior Quantitative Analyst Rocky White.
CVX Stock at Risk for Downgrades
Chevron shares have been charting a path steadily lower since starting the year in annual-high territory near $119, currently trading near $106.19. While the oil stock's mid-June rebound attempt was quickly halted by its 100- and 200-day moving averages, the latter has once again emerged as a ceiling this week. What's more, the 100-day moving average currently coincides with CVX's negative 10% year-to-date breakeven mark and a trendline connecting a series of lower highs since late January, suggesting technical resistance is firmly in place.
Despite these troubles on the charts, 12 analysts maintain a "buy" or better rating on the stock, compared to five "holds" and two "strong sells." Plus, the average 12-month price target stands at $116.24 -- a slim 9.5% premium to present trading levels, and in territory Chevron shares haven't seen since a late-January bear gap. A disappointing earnings report could spark a wave of
downgrades and/or price-target cuts, which could push CVX shares even lower.
Exxon Mobil Shorts Have Disappeared Ahead of Earnings
Exxon Mobil shares have shed 13.7% since topping out at a 12-month high of $93.22 in mid-December. More recently, a rebound off its June 2 annual low of $79.26 was halted by the stock's 120-day moving average.
XOM is now struggling beneath a trendline connecting a string of lower highs since mid-June, as well as its negative 10% year-to-date breakeven level, last seen trading at $80.46.
Not many traders have been betting against XOM stock.
Short interest actually fell 12.8% in the two most recent reporting periods, and now accounts for less than 1% of the equity's available float. This means there's little in the way of sideline cash available to help fuel any possible Exxon Mobil rally attempts.
There's plenty of room for analysts to downwardly revise their outlooks on XOM shares, too. Of the 18 brokerages covering Exxon Mobil stock, seven maintain a "buy" or better rating.