Valero Energy Corp. (VLO) was mentioned during the Lightning Round in Tuesday's Mad Money program. Prices have corrected lower the past five months (see the first chart below). Is this the time a place to consider a trade from the long side? Let's check.
In this daily bar chart of VLO, below, we can see that prices quickly lost about $35 this month - breaking below the declining 50-day moving average line and the cresting 200-day moving average line. The daily On-Balance-Volume (OBV) line has slowly weakened since early June and tells me that sellers of VLO have been more aggressive for the past five months. The Moving Average Convergence Divergence (MACD) oscillator is in a sell mode but could give us a cover shorts buy signal in the near-term.
In this weekly bar chart of VLO, below, we can see how prices have broken the flat 40-week moving average line and the chart support in the $100-$90 area. The weekly On-Balance-Volume (OBV) line has been weakening since May and tells me that sellers of VLO have been more aggressive. In the lower panel is the Moving Average Convergence Divergence (MACD) which is crossing the zero line for a sell sign.
In this Point and Figure chart of VLO, below, we can see the long decline and an upside price target of $114.52.
Bottom line strategy: VLO looks oversold enough to generate a rebound rally. Maybe we get back to the $105-$110 area before we need to re-appraise the charts again. Risk a close below $85.