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Unusual Pattern of the Day: ExxonMobil (XOM)

Unusual Pattern of the Day: ExxonMobil (XOM)

Energy stocks continue to rise as they attract investor interest. One such name is energy giant ExxonMobil (XOM). Shares have moved from $32 at the start of November to $48. While shares look overbought in the short-term, a longer-term trend suggests the rally will continue.

The long term trend? A golden cross. That’s where the stock’s 50-day moving average crosses over the 200-day moving average. It’s a solid sign that the company, which spent most of 2020 out of favor with the market, will continue to move higher.

Action to take: In the short-term, a small pullback is likely, and already seems underway. Shares have gotten ahead of themselves by getting into overbought territory, but are rapidly coming back down. Traders should look at going long Exxon shares when the stock’s relative strength index, or RSI, gets into the low 50 range.

Once that occurs, investors can buy shares to enjoy a bounce and the 7 percent dividend yield here. Or, they can buy a call option like the April 2021 $50 calls. Last trading at about $2.32, on a slight pullback, traders can likely start to get into a position under $2.00. On a renewed move higher in shares, traders can likely leverage the move into a mid-double-digit return with these options.