In his Executive Decision segment of "Mad Money" Tuesday, Jim Cramer sat down with Mike Wirth, chairman and CEO of Chevron Corp. (CVX) , to talk about the outlook for his company and the fossil fuel industry.
Wirth said Chevron welcomes the coming transition in energy and is built for the future. Chevron has the strongest balance sheet in the industry, according to Wirth, who said Chevron cares about more than climate change. It's concerned with all aspects of the environment, including air, water and ground pollution as well as sustainability.
Cramer said investors who want to invest in oil should invest in the best, which is Chevron. Let's visit with the charts.
In this daily bar chart of CVX, below, we can see that prices have been under selling pressure for the past 12 months. The Japanese candlestick bars do not yet show a strong reversal pattern, so I would be in no rush to go long CVX. Prices are below the declining 50-day moving average line as well as the bearish 200-day moving average line. The On-Balance-Volume (OBV) line began to weaken in September, telling us that sellers of CVX were more aggressive. The 12-day price momentum study (a leading indicator) shows lower lows from January to February. This shows us that momentum has not yet slowed and there is no bullish divergence, suggesting that buyers have bought to slow the decline.
In this weekly bar chart of CVX, below, we went back to 2015 to show where next support might be and to show the size of the topping pattern. Prices have been rolling over and bouncing off of the $100 area since 2017 for a three-year topping process. The next chart support may be in the $80-$70 area, but it is way back in the market's history and traders may not care. The 40-week moving average line is bearish. The weekly OBV line is bearish and so is the Moving Average Convergence Divergence (MACD) oscillator.
In this daily Point and Figure chart of CVX, below, we can see that the software is projecting a potential downside price target in the $87 area. In a bear trend downside price targets can get easily overrun.
Bottom line strategy: While some knowledge of what OPEC may do about supply-and-demand imbalances might help in trading a stock such as CVX, the cold truth is we see no signs of the beginning of a bottoming process for Chevron. Buyers should be patient.