CVX

Chevron near 52-week low as oil continues to fall

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What's Happening

Oil prices continue to fall, and big oil and gas stocks are taking a hit. Oil and gas giant Chevron recently hit a 52-week low in reaction to falling oil prices and the stock is currently down 16% on the year.

Technical Analysis

CVX was recently trading at $104.98 down $28.9 from its 12-month high and $0.79 above its 12-month low. InvestorsObserver's Stock Score Report gives CVX a 37 long-term technical score and a 29 short-term technical score. The stock has recent support above $105.5 and recent resistance below $114. Of the 16 analysts who cover the stock 10 rate it Strong Buy, 1 rate it Buy, 5 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, CVX gets a score of 43 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

As oil prices continue to fall big oil and gas stocks extend their recent losses. CVX recently hit a new 52-week low in reaction to the drop in crude prices, but the stock's valuation has fallen into oversold territory and should enjoy a nice bounce if and when crude prices start to stabilize. As recently as October Brent Crude was trading at $87 a barrel, but since that time prices have fallen to their current level of $54.50, for a 37% pullback. Not only is there a fear of oversupply, but now concerns are also mounting over slowing global growth which will impact demand for the supply. Russia recently announced its daily production had risen to a new record 11.4 million barrels a day, and Saudi Arabia is also producing oil at a 22-month high of 7.7 million barrels a day. The U.S. is also producing a lot of oil, around 11.6 million barrels a day which is up 1 million barrels from the same time last year. Oil has taken a beating and until the market sees more firm commitments on production reductions crude will remain under pressure and oil and gas stocks like CVX will struggle to find their footing. Analysts have an average price target of $142.80 on the stock.

Stock Only Trade

If you're looking to establish a long stock position in CVX consider buying the stock under $105. Sell if it falls below $97 or take profits if it gets to $121.

Bullish Trade

If you want a bullish hedged trade on the stock, consider a 2/15/19 80/85 bull-put credit spread for a $0.25 credit. That's a potential 5.3% return (34% annualized*) and the stock would have to fall 19.3% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider an 2/15/19 120/125 bear-call credit spread for a $0.40 credit. That's a potential 8.7% return (56 annualized*) and the stock would have to rise 14.7% to cause a problem.

Covered Call Trade

If you like the stock but wish to lower your cost basis on a new position, you may want to consider a 2/15/19 $105 covered call. Buy CVX shares (typically 100 shares, scale as appropriate), while selling the 2/15/19 $105 call for a debit of $99.58, per share. The trade has a target assigned return of 5.4%, and a target annualized return of 35% (for comparison purposes only).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Originally published on InvestorsObserver.com


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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