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XOM: Exxon In A Range

June 9, 2008 10:41 PM

XOM should trade between $85 and $96.12 until one of them clears. The $85 low was somewhat predictable as I mentioned it had to clear $82.75 to cause real problems and could hold $84.26. It is difficult to understand the energy trade right now. Even with oil making fresh record highs, they have been pulling back. My guess is that long term investors are getting nervous of two possibilities: major backlash and long term damage.

Long term, there is no worse possible price of oil than higher for Exxon or any major oil. It brings into play a major push of alternative technologies that are no longer a “Green Dream”. They have economic viability. This will cause long term damage to these stocks. The Middle East is making a huge mistake by allowing prices to be at these levels.

The second problem is the possibility of both a political and economic backlash. If oil stays at these levels there could be some political unrest and people demanding action. In addition, it dramatically increases the odds of a severe recession which would lower demand.

This is a difficult trade here. The trade was long above the numbers indicated before, and that has proved correct. From here it becomes far more dicey and I would simply avoid it, IMO.

Written by Tom@StockBlade.com · Filed Under XOM 

Comments

One Response to “XOM: Exxon In A Range”

  1. Tom@StockBlade.com on June 11th, 2008 12:27 am

    One thing i forgot to mention…to challenge the high, it has to clear $90.50. Hence the tight range here.

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