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Apache, Exxon Mobil Rally as Crude Oil Declines

Stocks in this article: APA APC CVX HAL NOV OXY SLB XOM

NEW YORK (TheStreet) -- The oils-energy sector has been performing well in the last month or so, led by Dow component Exxon Mobil (XOM), which set a multi-year high at $96.00 on Nov. 18, and Apache (APA) which set a new multi-year high at $93.98 on Nov. 20.

Back on Sept. 11, 2012 I wrote, Energy Stocks Outperforming Crude Oil focusing on energy stocks that had more upside potential than crude oil. This all had to do with trading above or below their 200-day simple moving averages. All eight oils-energy stocks in today's post traded back and forth around their 200-day SMAs in 2012, then trended above in 2013. Meanwhile crude oil traded back and forth around its 200-day and has been below it since Oct. 22.

On Oct. 2, 2012 I wrote, Will the Oils-Energy Sector Catch QE Fatigue? showing that the oils-energy sector was just 3.7% overvalued. Yet, more than a year later now, I could ask the same question. After all, today the oils-energy sector is 17.1% overvalued and dominated by hold rated stocks instead of buy rated stocks.

Nymex crude oil ($93.79) set a 2013 high at $112.24 on August 28. This high was between my semiannual and annual risky levels at $109.84 and $115.23. Crude oil has been below its 200-day simple moving average (SMA) at $98.56 since Oct. 22 and traded as low as $92.43 on Nov. 19.

Courtesy of MetaStock Xenith

The weekly chart for crude oil is negative but oversold with its five-week modified moving average at $97.60 and its 200-week SMA at $91.79. Note that when the oil bubble popped in July 2008 the crash had oil moving below its 200-week SMA in October 2008. Note also how the 200-week SMA has been a magnet since mid-2009, and several times since including now.

Courtesy of MetaStock Xenith

Back on Oct. 2, 2012, all eight stocks had buy ratings. Today they are all rated hold. The price gains between today's post and the Oct. 2012 post range from 3.1% to 59.1%. In Oct. 2012, six were undervalued by 0.1% to 17.7%. Today all eight are overvalued by 11% to 52.2%. In 2012 three of the eight were below their 200-day SMAs and today all are above.

With stocks above their 200-day SMAs and crude oil below its 200-day, investors should reduce their allocations to the oils-energy sector. The sector has an equal-weight rating with 58.8% of the 551 stocks in the sector rated hold. Only 1.1% of the stocks have buy ratings and 29.2% have sell ratings.

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