Today’s Big Stock: Chevron Corporation Common Stock (NYSE: CVX)

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For today’s article I will be focusing on a stock that is approaching a 52-week high again. As a reminder, when it comes to a stock hitting a 52-week high, I prefer to look for ones hitting a “NEW” high. To me, his would be a stock that hasn’t hit a new 52-week high in quite some time. In addition, and more importantly, I want the stock to have broken through a key area of resistance. This way I know that it wasn’t just any move higher, it was a key breakout.

Chevron Corporation manages its investments in subsidiaries and affiliates and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in petroleum operations, chemicals operations, mining operations, power generation and energy services. Upstream operations consist of exploring for, developing and producing crude oil and natural gas; transporting crude oil by international oil export pipelines; transporting, storage and marketing of natural gas, and a gas-to-liquids project. Downstream operations consist of refining of crude oil into petroleum products marketing of crude oil and refined products.

To review Chevron’s stock, please take a look at the 1-year chart of CVX (Chevron Corporation) below with my added notations:


 

CVX has been trading mostly sideways for most of the entire last year. During that year, the stock has been running into resistance at $110 (navy). Even after a strong sell-off in July, the stock has worked its way back up to that $110 level a couple more times. The $110 resistance meets my definition of a clear resistance level that would signify an important 52-week high breakout if CVX could manage to break above it.  If the stock does break above the $110, it would probably be heading higher, most likely on a new uptrend.

The Tale of the Tape: CVX has formed a key resistance level at $110, which would be a 52-week high breakout if CVX could break above it. A long trade should be entered if CVX breaks above $110, with a stop set below that level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT