Dow components and energy giants Chevron Corporation (CVX) and Exxon Mobil Corporation (XOM) have underperformed badly in recent years, trading well below highs posted in the middle of the decade, held hostage by a slumping crude oil market and weak margins. Exxon Mobile has been a worse long-term investment, despite paying a hefty 5.04% forward dividend compared to CVX's 4.09%, with Exxon's share price stuck close to 2015 levels through most of 2019.
Exxon Mobile is trading higher by less than 1% in Friday's pre-market after filing a mixed third quarter report, beating profit estimates by a healthy margin while missing on revenues. Chevron is headed in the opposite direction, selling off around 1% after missing both top- and bottom-line estimates. In addition, revenues fell a whopping 17.9% year over year, giving shareholders another reason to abandon ship.
CVX Long-Term Chart (2003 – 2019)
Chevron stock hit a six-year low at $30.66 at the start of 2003 and turned sharply higher, entering a powerful trend advance that continued into the 2008 high at $104. It held up relatively well during the economic collapse, losing less than half its value before bouncing into the new decade. The stock broke out to a new high in 2012, posted modest gains into 2014's all-time high at $135, and entered a downtrend that accelerated through 2015.
Selling pressure ended at a six-year low in the upper $60s in early 2016, giving way to a strong recovery effort that completed a round trip into the prior high in January 2018. Bears then took control once again, knocking the stock to a two-year low at $100 in December 2018. It has performed poorly since bouncing into the $120s in March, posting a series of lower highs and lower lows that have broken support at the 200-day exponential moving average (EMA).
Price action since 2018 has carved a descending trendline, with resistance now situated above $128, or about 13 points higher than Friday's opening print. It makes no sense to buy the stock for a long-term hold until that resistance level is mounted, with the current decline wiping out gains booked from the dividend. Even so, Chevron stock has attracted a ton of buying interest this year, with accumulation-distribution readings close to two-year highs.
XOM Long-Term Chart (2002 – 2019)
Exxon Mobil stock found support in the lower $30s in 2002 after a modest downtrend and turned higher into mid-decade, breaking out to a new high. Buying pressure continued at a healthy pace into 2007, when the uptick stalled in the mid-$90s. Two breakouts attempt failed, carving a topping pattern that broke to the downside during the economic collapse. The stock settled at a two-year low in the $50s, but the subsequent recovery wave failed quickly, generating a 2010 retest.
A vertical bounce into 2011 marked the start of a fruitful period, with the uptick reaching 2007 resistance in 2013. It broke out at year end, posting decent gains into 2014's all-time high near $105, and failed the breakout a few months later. The decline finally ended at a five-year low during August 2015's mini flash crash, yielding a strong bounce into the summer of 2016. Price action since that time has carved a long series of lower highs and lower lows.
Chronically weak price action undercut the 2015 low in December 2018, while the oversold bounce into 2019 got sold aggressively in April. A steady downtick since that time has held just above 2018 support in the mid-$60s, raising the odds for a breakdown that exposes a secondary decline into the 2008 and 2010 lows in the mid-$50s. As a result, it's impossible to recommend the stock for purchase at this time.
The Bottom Line
Chevron and Exxon Mobil stocks are trading in opposite directions after third quarter earnings, while long-term bearish patterns warn sidelined investors to avoid taking exposure.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.