Saturday, December 19, 2009

XOM vs PBR, and the US Dollar Index

In this chart we can see the relationship between XOM and PBR. Take a look at the black line (the US dollar index) and the red line (XOM/PBR). We can see how the two lines have a close correlation. In my opinion, this relationship could be very useful to decide in which stock you should be invested. I think that (may be) the US dollar index can anticipate this relationship.




Time to sell PBR and buy XOM? May be. The next days I will be following this relationship.

In addition, a long term look at XOM. It is over an important tendency line, which was effective since 2002. Also, pay attention to the red line (9 EMA) and the yellow line (22 EMA), which give a buy signal in October 2009 and it is still valid (in the weekly chart).




Short term look:


10 comments:

  1. I like your charts - a lot! How come Cramer does not show something as intelligent as this? I just bought XOM and was warried sick, since I am not a trader...now i can sleep at least tonight...thanks!

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  2. So now, if Mr.Dollar spikes in February...it means we just have 3-4 weeks to pickup profit from XOM...because XOM will spike in a week or so, right...and then SELL,sell,sell XOM and buy UUP?????And, then when dollar goes up, market goes down...buy XOM again...hehehe...well...anybody....

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  3. Thanks! I am not holding XOM but I am waiting a signal to buy it, with a tight stop loss. We must be careful with the red trend line. If it does not hold, it would be very dangerous to hold a position on XOM. You know, I sleep well with my stops loss!

    I recommend to read this post:

    http://blog.afraidtotrade.com/technicians-edge-quick-look-at-levels-to-watch-in-xom-goog-and-aapl/

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  4. Sanja, thanks for your opinion!

    I am not sure about the spike in XOM in the next weeks (we have nothing sure in this market) but this price is a good level to evaluate a buy.

    We must be careful with the US dollar index, because a spike in the dollar is not good for stocks... what I am trying to show in the post is that if we expect a climb in the dollar, XOM is a better option than PBR... but this does not mean that XOM will go up... it will hold better than PBR...if it climbs is because its own's fundamentals and technicals....

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  5. I see...thanks for teaching me...I'll have to protect my XOM now...just in case...huh...nothing is easy in this market...How about UUP...a lot of March 23 calls...a lot...hmmm...

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  6. Yeah Sanja, may be, but only if XOM breaks the red line you will have to cover...
    Today US dollar up and the market up... it is not common.

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  7. Well, XOM broke the trendline. I did not buy... I am still waiting for a signal.

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  8. Greetings Max,

    I was wondering how you have handled the situation with XOM. Did you eventually buy the stock or are you still on the sidelines? I guess you already know that I tend to wait until the stock is within 20% of the low before doing the technical and fundamental analysis.

    Are you only investing through options or the shares? Is there a specific strategy that you are applying to your trades? Your thoughts appreciated.

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  9. I bought XOM at 65.69, the last week. I only invest in shares. I do not buy or sell options. Very useful your strategy on focusing on stocks that are within 20% of the low.
    I focus on the stocks of the DOW JONES, and some of the S & P 500, which have good fundamentals. Then, to this stocks, apply the technicals:

    My strategy is to buy stocks that, within that stocks of good fundamentals:

    1) Have 20 EMA UP in the weekly chart and buying after a pause in the trend (using 9, 13 &21 EMA's), with no divergences in technicals indicators and with the market uptrending, with a stop loss of 4%. Example: PG

    2) Stocks that are moving within a channel(UP or lateral). Example: XOM.

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  10. Sometimes I use Elliot Wave too to identify in which part of the trend we are.

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