Apache, Exxon Mobil Rally as Crude Oil Declines

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.


Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to stock valuation and forecasting firm, ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.

Apache (APA) ($93.18) reported quarterly results on Nov. 7 with an EPS beat of 15 cents earning $2.32 a share. Apache has been above its 200-day SMA since August 30, setting a multi-year high at $93.98 on Nov. 20. My monthly value level is $91.44 with a quarterly pivot at $92.02 and semiannual risky level at $112.79. Longer term this stock is below its 200-week SMA at $95.97 with crude oil above its 200-week SMA.

Anadarko (APC) ($90.54) reported quarterly results on Nov. 4 with an EPS miss of 5 cents earning $1.13 a share. Anadarko has been above its 200-day SMA for more than 52 weeks and set a multi-year high at $98.47 on Oct. 30. The stock has been below its 50-day SMA at $93.88 since Nov. 5 and traded as low as $89.30 on Nov. 13 making the 200-day a key support at $88.59. My annual value level at $89.73 was tested at the low and my annual pivot at $92.05 was exceeded at the high and my semiannual risky level at $94.69.

Chevron (CVX) ($122.00) reported quarterly results on Nov. 1 with an EPS miss of 13 cents earning $2.57 a share. The stock had been above its 200-day SMA since the beginning of the year until Oct. 3. Chevron has been trading back and forth around its 200-day at $120.71 since then and traded as high as $122.75 on Nov. 20. My semiannual value level is $113.49 with an annual pivot at $123.08 and monthly risky level at $125.00.

Halliburton (HAL) ($53.58) reported quarterly results on Oct. 21 with an EPS match earning 83 cents a share. The stock has been above its 200-day SMA for the past 52 weeks setting a multi-year high at $56.52 on Nov. 15. My monthly value level $50.52 with a semiannual pivot at $52.08 with a weekly risky level at $55.84.

National Oilwell (NOV) ($83.36) reported quarterly results on Oct. 25 with an EPS beat of 2 cents earning $1.34 a share. The stock has been above its 200-day SMA since July 31 setting a multi-year high at $84.70 on Nov. 15. My monthly value level is $78.56 with a weekly pivot at $84.16 and semiannual risky level at $92.05.

Occidental Petroleum (OXY) ($97.18) reported quarterly results on Oct. 29 with an EPS beat of 6 cents earning $1.97 a share. The stock has been above its 200-day SMA since April 24 setting a multi-year high at $98.70 on Oct. 18. The 50-day SMA is $95.16 with a monthly risky level at $98.09.

Schlumberger (SLB) ($90.45) reported quarterly results on Oct. 18 with an EPS beat of 5 cents earning $1.29 a share. The stock has been above its 200-day SMA since July 5 setting a multi-year high at $94.91 on Oct. 21 and ended Wednesday below its 50-day SMA at $90.84. My quarterly value level is $88.73 with a semiannual risky level at $95.14.

Exxon Mobil (XOM) ($94.68) reported quarterly results on Oct. 31 and beat EPS estimates by 2 cents earning $1.79 a share. The stock has had a volatile 2013 falling below its 200-day SMA on August 13 then back above it on Nov. 1 setting a multi-year high at $96.00 on Nov. 18. My semiannual value level is $89.50 with a quarterly risky level at $102.39.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier is the chief market strategist at AlphaPlus Analytics in addition to ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Contact Richard Suttmeier at RSuttmeier@Gmail.com

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