Exxon's Chart: Trending Sideways

By L.A. Little of Technical Analysis Today.

Exxon Mobil(XOM Quote) reported earnings Thursday, showing a top line decline of $55 billion in revenue. The stock opened down just over $1, but worked its way higher (with the help of the strong energy sector advance) to close in the green. Today the stock was definitely weaker than the general market, but will that continue?

In a Large Trading Range

When I look at the intermediate term trend, it is sideways. XOM continues to trade within the large trading boundary with the borders at roughly $75 on the top and $64 on the bottom. That represents an $11 range from top to bottom, or about a 14%-to-16% swing.

On a short-term timeframe (see chart below), the trendline was broken with yesterday's trade. After 14 days of advances with only four days of small percentage declines over the past week, a break of the steep trendline isn't a huge surprise. The majority of stocks that trade higher into earnings are selling off on earnings announcements this earnings season.

A more important takeaway from the short-term chart is that the risk on a short trade is much less than the potential reward. You have two technical events and one fundamental one that, when taken together, all suggest a potential short-term short trade. You have resistance now in the form of a trendline break/retest. Add that to resistance poised by the horizontal channel line and a fundamental sell the news reaction to earnings.

Energy Sector Influence

The influence of the energy sector should be examined as well. Here are the short- and intermediate-term charts of XLE Energy Select SPDR(XLE Quote). On the daily chart (shown below), there is a "confirmed uptrend" in place. (For definitions of my technical terms, click here.)