Crude oil prices were on Jim Cramer's mind during the "Off the Charts" segment from Tuesday night's Mad Money episode. For months Cramer has been watching the $50 benchmark for the commodity. Now that prices are at $48+, Cramer enlisted RightViewTrading.com publisher and Real Money contributor Robert Moreno to help chart a course prices could follow.
"We need to check in with Moreno because back on Feb. 23, just a couple weeks off the bottom, he looked at the charts and made some very bullish predictions, telling us that Exxon Mobil (XOM) - Get Report , Chevron (CVX) - Get Report and Schlumberger (SLB) - Get Report , and even pure play exploration and production companies like Pioneer Natural Resources (PXD) - Get Report , were all poised to rocket higher," Cramer told viewers.
"At a time when many people were still scared that the oils would have trouble getting traction, Moreno's analysis of the technicals made him unabashedly positive and he totally nailed it," he said.
However, those good times may have run their course , and Moreno and Cramer see some belt tightening occurring in the near term. The pair started with Exxon.
Exxon Mobil has rallied nearly 11% since February. However that momentum is slowing down if you can read the charts right.
"First of all, after this big rally, Moreno notes that even though the MACD line and the Chaikin Money Flow oscillator, which measures the volume of buying and selling pressure, remain in positive territory, they've both flattened out. That suggests Exxon has less momentum," Cramer said.
"Second, when you look at Exxon's trading range from the peak in 2014 to its low in 2015 and divide that range into four equal zones, the stock price is now pushing against the line that separates it from the highest zone, the uppermost quadrant, at just below $90."
Moreno identified that zone as an important reference point at which the stock starts trading sideways. Exxon is currently trading at a 10% premium to its 200-day moving average. The fact a stock rarely gets that far ahead of a key moving average concerns Moreno. The last time Exxon saw a premium that wide was December 2013, right before it corrected with an ugly 12% decline.
"Put it all together and Moreno believes Exxon's due for a pullback, although whether it will be a brief dip or a severe pounding is hard to say," Cramer said.
Next up was Chevron.
Moreno has previously called Chevron his favorite of the major integrated oils. That sentiment has been rewarded as the stock has gained 18% since late February.
"When we checked in with Moreno in late February, Chevron was a laggard that looked poised to play catch-up. He said that as long as the stock could hold above a key Fibonacci retracement level at $83 and then break out above its downtrend line at $89, we could catch a magnificent rally," Cramer told viewers.
Despite that good news, Chevron's chart has multiple bearish indicators, including a declining Moving Average Convergence Divergence oscillator and a falling Chaikin Money flow oscillator. Add to that the fact that Chevron is trading at a 9% premium to its 200-day moving average, its largest premium since 2014.
"Add it all up, and Moreno thinks Chevron could get slammed if the stock breaks down below the $98.75 level that's been supporting it for the last month-that's less than two bucks below where it's currently trading," Cramer said.
Pioneer has rocketed more than 37% since the last time Cramer turned to Moreno for oil stock advice in February. Moreno pointed to ceiling resistance of $126 per share as the level to watch. If Pioneer was able to crack that, then the sky was the limit, Moreno said. Moreno once again proved to be prescient as the stock closed trading Tuesday at $162.97.
"Now, though, Pioneer's daily chart is facing another ceiling of resistance at around $168, which represents a 50% retracement of the decline from the 2014 peak to the stock's triple bottom lows last February," Cramer said. "To make things more difficult, the MACD and Chaikin Money flow oscillator are declining, and for the last three weeks the stock has been stalled out as Pioneer has repeatedly failed to break through its ceiling of resistance."
If it can't clear $168, then a pullback and consolidation might be necessary, Moreno concluded.
The last chart in Tuesday's segment belonged to Schlumberger, an Action Alerts PLUS holding.
Schlumberger has been on a seesaw ride the last three months, jumping to $81 in April from $72 in February. But the stock has given back most of its gains since then and closed at $75.62 on Tuesday. The stock has made a head and shoulders pattern, which looks like a person's head between two shoulders, one of the most reliably negative formations in the book.
"Meanwhile, the Chaikin Money flow oscillator is in negative territory, which suggests the big money managers are selling the stock. At this point, it's hard to predict which way Schlumberger will jump, but the chart is a lot less positive than it was three months ago," Cramer concluded.
The bottom line, as interpreted by Moreno, is the oil sector's rally has mostly run its course. Look for the commodity to pause or even pullback in the near term. "Even if you believe the oils have more room to run, remember that nobody ever got hurt taking a profit," Cramer advised.
At the time of publication, Cramer's Action Alerts PLUS had a position in SLB.