In his first "Executive Decision" segment of Wednesday's Mad Money, Jim Cramer sat down with Mike Wirth, chairman and CEO of Chevron (CVX) , on the heels of the company's investor day where they laid out Chevron's sustainability mission and goals.
Wirth admitted that Chevron is a very different energy company today than when he joined 40 years ago. But Chevron is listening to shareholders that are demanding more environmental responsibility and increases in sustainability. That's why Chevron has tripled its commitment to invest in faster-growing, lower-carbon energy sources.
Chevron now has a dual strategy. It aims to continue being a leader in a diverse energy environment while still creating value and returns for its shareholders. There are many markets where electrification doesn't make sense, Wirth explained, and those are places where Chevron can add real value.
As for creating shareholder value, Wirth said Chevron has always been disciplined with their capital allocation and these new investments will be no different.
Let's check out the charts of CVX.
In this daily bar chart of CVX, below, we can see that prices have corrected lower since the middle of March. CVX is trading just below the declining 50-day moving average line and below the cresting 200-day line. The 50-day line is poised to cross below the 200-day line for what is commonly called a dead or death cross. This mechanical sell signal is typically late and when "back tested" is not all that successful.
The On-Balance-Volume (OBV) line shows a decline from June into early September telling us that traders have been more aggressive sellers of this energy giant.
The Moving Average Convergence Divergence (MACD) oscillator shows a small bullish divergence as prices made a new low in August but the oscillator made a higher low. The pace of the decline has slowed and that can foreshadow a rise in price in the weeks ahead.
In this weekly Japanese candlestick chart of CVX, below, we can see that the $95 area is the top end of a potential support zone. Two lower shadows in July and August give us a hint that this support area could hold.
The slope of the 40-week moving average line is flat or neutral and it should not take much of a rally to close back above this indicator.
The OBV line shows a low in July and then a bounce. The MACD oscillator is close to crossing the zero line but has been narrowing.
In this daily Point and Figure chart of CVX, below, we can see that prices reached a downside price target of $96. Technically oriented traders may be inclined to cover shorts but this does not mean that prices cannot go lower.
In this weekly close only Point and Figure chart of CVX, below, we can see the $96 area is again a price target. A rally to $101.37 should improve the chart's potential.
Bottom line strategy: The price of CVX has corrected lower for six months now. We have some tentative signs that support around $95 is holding and that gives us optimism about a move to the upside. Traders could go long CVX on strength above $102.50 risking to $94.
