Monthly Trendline and Triangle in XOM

May 3, 2010: 2:00 PM CST

I’ve written previously about the long-term triangle in Exxon-Mobil and had a reader request to update that analysis, and this time I’ll add a monthly arithmetic and logarithmic trendline to the mix.

First, let’s start with the arithmetic long-term monthly view of XOM:

Starting with the 1995 low under $15.00 per share, we see the large rise over the last 15 years that has taken Exxon-Mobil (XOM) to its peak of $90.00 in mid-2008, through the bear market fall to $55.00, and now to its present level of $67.00.

You can see the pure price triangle clearer on the arithmetic scale.

The upper resistance boundary rests at $70.00 per share while the lower rising trendline now rests at the $65.00 per share level as the triangle continues to contract.

For additional reference, the 20 month EMA (green) rests at $69.70 (near last month’s high) while the 50 month EMA (blue) rests at $68.28.

As with all triangle patterns, we would expect a range expansion trend move to occur on a confirmed break of these levels, so keep that in mind as the triangle continues to contract while price remains within the boundaries.

However, the long-term charts are perhaps more viewed more appropriately on a logarithmic scale:

I posted previously on the Difference in Logarithmic and Arithmetic Trendlines, so be sure to review that post to understand the current chart.

As a quick review, rising trendlines are broken first on the arithmetic (price) scale vs the logarithmic scale (percentage).

You see that is true above as you compare the trendlines from the 2003/2004 low (which also stretch back to 1995 on the log scale).

What that means now is that price is supporting – forming the lower support boundary – on the long-term monthly logarithmic chart trendline as seen above, which also rests at the $65.00 per share level.

Use these charts, and these trendlines, as references into the future as the stock remains within the boundary lines and be on alert for any strong break outside of the boundaries.

Corey Rosenbloom, CMT
Afraid to Trade.com

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1 Comment

One Response to “Monthly Trendline and Triangle in XOM”

  1. TheYenGuy Says:

    Exxon Mobil, XOM, is neither a XLE sector performer stock, like Chevron, nor is it sought after as a dividend paying stock, as its dividend is frustratingly small in amount. It is popular with income funds and those who invest according to Islamic principles, or Sharia. These principles require that investors avoid interest (riba) and investments in businesses such as liquor, pornography, gambling, and banks, bonds and other fixed-income securities. In other words it is not for the average fixed income investor. It has been underperforming peer group, XLE, since 3-29-2009; it is likely to be amongst the first of its group to fall significantly in value. Exxon Mobil has been underperforming the S&P for the last five days by three percent. The Stockcharts.com chart shows that it hit resistance at 68.84. One can expect loss of capital by investing in or continuing to invest in Exxon Mobil. It does not move very much so it does not represent a good short selling opportunity. It is simply a “herald” stock; its performance reflects that we have reached the end of the age of profitable investing in natural resource stocks. We are at the cusp of a major stock market downturn and likely liquidity evaporation where one may not have ready access to funds in brokerage accounts and money market accounts. Wealth is best preserved by personal ownership of gold.
    The Yahoo chart of Exxon Mobil which shows a close at 67.84; it pays a dividen of 1.68 which is 2.50%.
    http://finance.yahoo.com/q/bc?s=XOM&t=5d&l=off&