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Buy oil giants Chevron  (CVX - Get Report) and Exxon Mobil  (XOM - Get Report) on post-earnings weakness as these components of the Dow Jones Industrial Average offer solid dividends and are lagging Nymex Crude Oil Futures. 

Chevron is a buy down to its monthly value level at $109.44. Exxon is a buy down to its quarterly value level at $77.66. As perennial members of the "Dogs of the Dow," Chevron offers a dividend yield of 4.11% and Exxon's dividend yield is 4.23%. Both have P/E ratios below the market multiple of 17.6 at 15.07 and 16.42, respectively, according to Macrotrends.

Crude oil is up 43.3% year to date with Exxon up 20.6%. Chevron lags with a gain of 8.4% as its absorbs costs related to its pending purchase of Anadarko (APC) for $33 billion. The deal's price may be raised as Occidental Petroleum  (OXY - Get Report) has countered with a $38 billion offer.

The Daily Chart for Crude Oil

Courtesy of Refinitiv XENITH

The daily chart for Nymex crude oil shows that the nearby contract traded as high as $76.90 on Oct. 3. From this high to the low of $42.36 set on Dec. 24, oil fell by a bear market decline of 45%. Since this low, oil is in bull market territory up 53.6%. The close of $45.41 on Dec. 31 was an input to my proprietary analytics and its annual value level lags at $38.76 with a semiannual pivot at $50.84. The March 29 close at $60.19 was the latest important input to my analytics. This resulted in a monthly value level at $50.45 with a quarterly risky level at $68.52.

The Weekly Chart for Crude Oil

Courtesy of Refinitiv XENITH

The weekly chart for crude oil is positive but overbought with oil above the its five-week modified moving average of $60.02 and above its 200-week simple moving average or "reversion to the mean" at $52.36. The 12x3x3 weekly slow stochastic reading is projected to end this week at 91.93 as an "inflating parabolic bubble."

Trading Strategy: Buy weakness to 200-day simple moving average at $61.09 and reduce holdings on strength to its quarterly risky level at $68.52.

The Daily Chart for Chevron

Courtesy of Refinitiv XENITH

The daily chart shows a price gap lower on April 12 when the press release was issued that announced that Chevron was buying Anadarko for $33 billion in a cash-and-stock deal. This pressure has the stock below its 200-day simple moving average at $118.73. Chevron traded as low as $100.22 on Dec. 26 which turned out to be a "key reversal" as the close of $107.39 was above the Dec. 24 high of $104.15. This was a signal that 2019 would begin with a tradeable rally. The Dec. 31 close of $108.79 was an important input to my proprietary analytics. This resulted in a semiannual value level at $106.15 and an annual risky level at $131.43. The close of $123.18 on March 29 was an input to my analytics and generated a monthly value level at $109.44 and a quarterly risky level at $129.28.

The Weekly Chart for Chevron

Courtesy of Refinitiv XENITH

The weekly chart for Chevron is negative with the stock below its five-week modified moving average of $120.41 and above its 200-week simple moving average or "reversion to the mean" at $108.12. The 12x3x3 weekly slow stochastic reading is projected to fall to 65.52 this week down from 78.45 on April 18.

Trading Strategy: Buy weakness to the monthly and semiannual value levels at $109.44 and $106.15, respectively, and reduce holdings on strength to quarterly and annual risky levels at $129.28 and $131.43, respectively.

The Daily Chart for Exxon Mobil

Courtesy of Refinitiv XENITH

The daily chart shows the formation of a "golden cross" on April 11. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average signaling that higher prices lie ahead. Exxon traded as low as $64.65 on Dec. 26 and the close that day was $68.64 which was above the Dec. 24 high of $67.53 confirming a "key reversal." This meant that 2019 would begin with a tradeable rally. The Dec. 31 close of $68.19 was an important input to my proprietary analytics. This resulted in a semiannual value level at $69.47 and an annual risky level at $94.26. The close of $80.80 on March 29 was an input to my analytics and generated quarterly and monthly value levels at $77.66 and $75.48, respectively.

The Weekly Chart for Exxon Mobil

Courtesy of MetaStock Xenith

The weekly chart for Exxon Mobil is neutral with the stock on the cusp of its five-week modified moving average of $79.97. The stock is just below its 200-week simple moving average of "reversion to the mean" of $81.61. The 12x3x3 weekly slow stochastic reading is projected to slip to 85.40 this week down from 89.18 on April 18 with both readings above the overbought threshold of 80.00.

Trading Strategy: Buy weakness to the quarterly and monthly value levels at $77.66 and $75.48, respectively, and reduce holdings on strength to the annual risky level at $94.26.

How to use my value levels and risky levels:

Value levels and risky levels are based upon the last nine weekly, monthly, quarterly, semiannual and annual closes. The first set of levels was based upon the closes on Dec. 31. The original semiannual and annual levels remain in play. The weekly level changes each week; the monthly level was changed at the end of January, February and March. The quarterly level was changed at the end of March. My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.

How to use 12x3x3 Weekly Slow Stochastic Readings:

My choice of using 12x3x3 weekly slow stochastic readings was based upon back-testing many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years. The stochastic reading covers the last 12 weeks of highs, lows and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading and I found that the slow reading worked the best. The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered overbought and readings below 20.00 considered oversold. Recently I noted that stocks tend to peak and decline 10% to 20% and more shortly after a reading rises above 90.00, so I call that an "inflating parabolic bubble" as a bubble always pops. I also call a reading below 10.00 as being "too cheap to ignore."

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.