We last looked at the charts of Valero Energy Corp. (VLO) in April, where I wrote that "Risking below $95, traders could go long VLO on strength looking for gains to the $120 area." Looking at an updated VLO chart Thursday, I can see that our price objective/target was reached in late May before prices turned lower. Support developed around $105 and prices are now back near their zenith.
Is there another attractive trade from here? Let's check on this stock mentioned by Jim Cramer on Real Money Thursday.
In the daily bar chart of VLO, below, we can see a number of positive clues. Prices corrected lower in June and July but notice how little the On-Balance-Volume (OBV) line declined. It looks like VLO fell of its own weight rather than from aggressive selling. The OBV line has since recovered and is near its peak. VLO is above the rising 50-day moving average line again as well as the bullish 200-day line.
The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since the end of July and is still bullish now.
In the weekly bar chart of VLO, below, we also have some bullish developments. Prices are above the rising 40-week moving average line. The weekly OBV line looks like it is curving up again which indicates more aggressive buying.
The weekly MACD oscillator has narrowed and is close to an upside crossover and fresh buy signal.
In this Point and Figure chart of VLO, below, we can see a potential price target of $142.14.
Bottom-line strategy: Aggressive traders could go long VLO around the $120 level, risking a close below $110 or below $105. A breakout above $125 could lead to gains to the $142 area.