During Tuesday night's Mad Money program, Jim Cramer spoke about the recovery in oil prices which have rebounded from -$37 a barrel to $37. Maybe now is the time to take a second look at the oil stocks? Cramer said he continues to believe that the future does not belong to fossil fuels. But in the short term, there might be gains to be had.
Cramer cautioned that investors cannot count on the dividends of oil producers, with the single exception of Chevron Corp. (CVX) . Chevron's current 5.4% is safe and the only one worth investing in.
(For more on CVX, see Jim Cramer: There Are a Handful of Oils I'd Own)
In this daily bar chart of CVX, below, we can see that CVX started its decline in January and bottomed with the broad market in March. Prices are better but still way below pre-pandemic levels. Prices are above the rising 50-day moving average line but below the declining 200-day moving average line.
The daily On-Balance-Volume (OBV) line shows a decline from September to March which tells us that sellers were more aggressive for several months before the Covid-19 plunge. The OBV line has improved from March and is nearly back to the level it stood at before the January-March decline.
The Moving Average Convergence Divergence (MACD) oscillator gave a buy signal back in April and is still above the zero line but ready for its next move.
In this weekly bar chart of CVX, below, we can see some improvement. Prices are off their March lows but still below the declining 40-week moving average line.
The weekly OBV line sank sharply into March but it has since roared back and is close to making a new high. The MACD oscillator crossed to the upside last month for a cover shorts buy signal.
In this first Point and Figure chart of CVX, below, we used daily price data to construct the chart. Here the chart is projecting a potential rally to the $103 area.
In this second Point and Figure chart of CVX, below, we used weekly price data. Here the chart suggests that a new high of $126 is possible.
Bottom line strategy: Traders could go long CVX at current levels and risk a close below $98. The $103 area is our first upside price target. $115 is the next target.