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Why Phillips 66’s Diversified Growth Model Matters

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Part 2
Why Phillips 66’s Diversified Growth Model Matters PART 2 OF 12

Behind Phillips 66’s Moving Averages in 3Q17

Phillips 66’s moving averages

In 1Q17, Phillips 66’s (PSX) stock fell, likely due to PSX’s 4Q16 earnings, which missed estimates, and high gasoline and distillate inventories in the industry. PSX’s 50-day MA (moving average) broke below its 200-day MA in the first quarter.

Behind Phillips 66’s Moving Averages in 3Q17

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The downtrend in the first quarter extended into the early days of 2Q17 in anticipation of earnings, but after PSX announced its 1Q17 numbers, which surpassed its estimates, the stock rose. Still, PSX’s 50-day MA stayed below its 200-day MA.

Phillips 66’s moving averages in 3Q17 so far

Phillips 66 stock continued its uptrend in 3Q17 in anticipation of its 2Q17 numbers. After Phillips 66 announced its 2Q17 numbers, which showed a rise in refining earnings, the stock surged.

At the end of August, the refining environment actually strengthened as a result of Hurricane Harvey, and Phillips 66’s 50-day MA crossed over its 200-day MA. When a short-term moving average crosses above a longer-term moving average, it’s considered as a bullish technical sign. Phillips 66’s 50-day MA trades 2.4% above its 200-day MA.

Peer moving averages

Andeavor’s (ANDV), Valero Energy’s (VLO), and Marathon Petroleum’s (MPC) 50-day MAs are trading 10.3%, 1.8%, and 4.4%, respectively, above their 200-day MAs. But as PSX’s and VLO’s 50-day MAs are just ~2% above their 200-day MAs, any adverse news on refining cracks or inventory positions in the market could cause their 50-day MAs to breach below their 200-day MAs.

By comparison, the SPDR Dow Jones Industrial Average ETF Trust’s (DIA) 50-day MA is now trading ~4.6% above its 200-day MA.

If you want to know about Phillips 66’s stock price estimate range for the next three months based on its implied volatility, continue to the next part of this series (below).

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