Feeding The Chevron Bears
Published April 8, 2017
On April 7, 2017, the Chevron Corporation (CVX) crossed below its 150 day moving average (MA). Historically this has occurred 253 times and the stock does not always drop. The stock has a median loss of 3.162% and a maximum loss of 55.271% over the next 15 trading days.
When we take a look at other technical indicators, the relative strength index (RSI) is at 48.9096. RSI tends to determine overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. The current reading declares the stock is relatively neutral, with no clear volatile price swing on the horizon.
The true strength index (TSI) is currently -16.6606. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The current reading declares the stock is down, and has remained around its current reading for a few weeks. This indicator should have moved up or down by now which adds to the uncertain future and leaves a drop in the stock price well within play.
The positive vortex indicator (VI) is at 1.0845. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The current reading declares the stock is moving up.
The stochastic oscillator K value is 71.4480 and D value is 69.7333. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The current reading declares the stock has been moving up, but the divergence between the two has recently narrowed and a downturn is likely to quickly occur.
Considering the moving average crossover, RSI, TSI, VI and stochastic levels, the overall direction appears to be heading down. Based on historical movement compared to current levels and the current position, the stock could lose another 2.28% over the next 15 trading days. On the day previous to this negative cross below the MA, the stock crossed above. The last 11 times in the past decade, the stock crossed and closed below the MA one day after it closed above the MA, the stock dropped a minimum of 1.728%.
DISCLOSURE: I currently do not have positions in the stock mentioned above. I most likely will not enter a position within the next 72 hours. Historical movements and technical indicators should never be the sole basis for entering positions involving risk. Make sure appropriate research is conducted prior to taking any risk in a marketplace.