Marathon Oil (
appeared on the daily bearish scan the other night and after a
deeper look into the stock, I became more intrigued by the
bearish signal. The stock has rallied nicely since the beginning
of February and that has caused both the slow stochastic and
to hit overbought levels. Normally a simple overbought reading
isn't enough to warrant my attention, but when I looked at the
two oscillators for MRO and saw that both had not been in
overbought territory since last November-right before the stock
dropped over 17%.
One of the things I always do when analyzing a
is look at multiple charts. I usually start with the daily and
then move to the weekly and monthly charts. The reason for this
becomes more apparent when you look at the weekly chart of
Marathon Oil stock. Had I just looked at the daily chart, I might
have missed a possible pattern development on the weekly
MRO could be forming a head and shoulders pattern. The left
shoulder is right around the $37 mark and formed back in June of
last year (just out of the time frame on the daily chart).
Marathon Oil stock dropped down to the $32 level for the first
trip to the neckline and then bounced up to $38 to form the head.
The dip from November to February created the second trip to the
neckline and now the stock is back up near the $37 area to
potentially form the right shoulder. Had I just looked at the
daily chart, I would have missed this development.
It is also worth noting that the weekly stochastic readings
are in overbought territory and look like they could perform a
bearish crossover either this week or next. If you look at the
crossover in November, you can see how the selloff developed.
This pattern along with the pattern from the daily oscillators
and the possible head and shoulders pattern give us three
negative probabilities for MRO.
The sentiment toward MRO is over the top
right now which also plays into a bearish forecast. The
short-interest ratio is a paltry 1.9 and the put/call ratio
dropped sharply after the April options expired and is now the
lowest it has been in the past year. The analyst ratings show 26
followers with 18 "buy" ratings and eight "hold" ratings. The
overall sentiment composite using my proprietary system is 5.03.
I consider anything over 10 to be a bullish reading and anything
under 7.0 to be a bearish sign.
MRO will announce earnings on May 6, so that gives the stock a
few weeks to move before the earnings announcement. Over the past
year, MRO has missed earnings estimates twice and beat twice, so
there isn't a pattern there.
I would look to short MRO and try to get a decent gain in the
next two weeks. If that takes place I would look to close part of
the trade before the earnings announcement or at least put a
pretty tight stop on the trade.
8 Dividend Checks from 1 Stock
It's one of the best-kept secrets in the market today… an oil
company paying out bigger dividends than Exxon and BP. This
highly-profitable company rewards shareholders with unannounced
"bonus" dividend checks. And it pays them out every quarter. And
that's on top of its regular, scheduled dividends - meaning
shareholders are collecting 8 dividend checks a year, all from
this one investment. If you'd like to earn some extra income
simply by sitting back and collecting these extra dividend
Click Here to find out everything you need to