Market Update: I am sure that you all have seen that the market has fallen well off its highs due to uncertainty and potential fallout from the Coronavirus epidemic.
Over the past few weeks, the indexes have fallen sharply and are now trading about 30% below their previous highs.
This means we are officially in a bear market. Fortunately, this is not all bad news.
As traders, with the right strategies, we can make a profit in any market. My PowerTrend system applies just as well in bearish markets.
I shift my focus from bullish call options and call option spreads to bearish put options and put option spreads, but the underlying system remains the same.
Now, let’s beat the bear market and start making money!
Yesterday, we looked at a 10-Month SMA chart of American Airlines Group Inc. and noted that it was showing a ‘Sell’ signal after its monthly price is trading below the 10-Month SMA.
Today’s Chart of the Day is a Daily Price Chart for Exxon Mobil Corp. (NYSE: XOM).
Exxon Mobil Corporation explores for and produces crude oil and natural gas in the United States, Canada/other Americas, Europe, Africa, Asia, and Australia/Oceania. It operates through Upstream, Downstream, and Chemical segments. The company is also involved in the manufacture, trade, transport, and sale of crude oil, petroleum products, and other specialty products; and manufactures and markets petrochemicals, including olefins, polyolefins, aromatics, and various other petrochemicals.
Now, the Daily Price Chart below shows that XOM has been making a series of 52-Week Lows since early January.
A stock hitting new 52-Week Lows is in a very powerful downtrend.
And as we know, stocks in a price downtrend do not advance in a straight line.
There are always price retracements along the way.
XOM experienced periodic price rebounds during its strong decline since January.
Traders can get a lower risk entry point for bearish put purchase trades after a 3 to 5% price rebound as the stock normally resumes its price downtrend after such retracements.
We’ll be sure to continue following Exxon Mobil Corp. as it drops to new lows, and watching for price rebounds.
Editor, Chart Of The Day