Marathon Petroleum (MPC) gapped up to a new high this morning, but prices are pulling back and could fill that gap before we see renewed gains in the weeks ahead. While gaps are dramatic attention-getters, we are probably better served by focusing on the longer-term trend of prices. Let's take a look.
In this one-year daily chart of MPC, above, we can see a low in February and a retest/pullback in June. A four-month consolidation in August-November was resolved on the upside in late November. A bullish golden cross in September helped along with the still rising 50-day and 200-day moving average lines. The On-Balance-Volume (OBV) line made lows in February and May and moved up to new highs along with the price action in November and December. There are two technical reasons supporting our expectation of today's gap being filled -- first the volume of trading today is not particularly heavy. That tells us the bulls are not voting heavily on this move up. Second, momentum in the lower panel has been slowing since late November. These two technical clues suggest that prices are not likely to "runaway on the upside."
In this three-year weekly chart of MPC, above, we can see that prices are above the rising 40-week moving average line. The price action today is not yet on this weekly chart but it would show a push up into overhead resistance. The weekly OBV line has diverged bearishly from the price action in the past two months. The weekly Moving Average Convergence Divergence (MACD) oscillator is in a bullish configuration since August.
This weekly Point-and-Figure chart of MPC, above, shows both the sharp runup in November and December and the old overhead resistance from 2015. MPC could ignore the overbought readings and the resistance and just move higher, but I am more inclined to anticipate a correction before we resume the uptrend.