Marathon Oil Corporation operates as an energy company. It operates through three segments: North America E&P, International E&P, and Oil Sands Mining. The North America E&P segment develops, explores for, produces, and markets crude oil and condensate, natural gas liquids, and natural gas in North America. The International Exploration and Production segment explores for, produces, and markets crude oil and condensate, natural gas liquids, and natural gas in Equatorial Guinea, Gabon, the Kurdistan Region of Iraq, Libya, and the United Kingdom; and produces and markets products manufactured from natural gas, such as liquefied natural gas and methanol in Equatorial Guinea. The Oil Sands Mining segment mines, extracts, and transports bitumen from oil sands deposits in Alberta and Canada; and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil.
Take a look at the 1-year chart of Marathon (NYSE: MRO) below with my added notations:
Although its overall trend is still down, MRO has doubled in price since February. During the August to present timeframe, the stock has had a tendency of creating support and resistance levels at the increments of $2 (blue). More specifically, the $10, $12 and $14 levels have been key. Even now the stock is pausing at $14.
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The Tale of the Tape: MRO tends to react to each $2 level. A long trade could be made on a break through $14, or on a pullback to $12, with a stop placed under the level of entry. A short trade could be made on a break below $12.
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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach