Good News/Bad Reaction:
The is bearish PRICE action 101. Late in January, I sent out a tweet that nearly went viral (my only one in more than 10 years on this platform) on CVX, that read something like “There is nothing more bearish that a bullish setup that fails.” And that was precisely what occurred after a valiant attempt at breaking above a cup base with a pivot in the 190 area it backed off and kept on going. The second-largest holding in the XLE dragged down many of its peers in the aftermath. Concerning is how its 50 WEEK SMA which has been more than comforting the last couple of years has been trading sideways since February. But more importantly, CVX is now below that secular line after bumping higher off it in September ’21, and July and September ’22. And the small sample size is starting to grow. A nice recapture of the line after falling below it in April, and then losing it again, is a red flag. The very round 150 area feels like a line in the sand (should I say fracking for humor). Below one can see the bear flag in that area. Top component XOM, however, still has a rising 50 WEEK SMA and is above it, so perhaps that name is better managed or more liked by the institutional community. Overall I think the energy group is headed lower after a very robust 2021-22, but a tactical long may be the way to be positioned here.