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Valero's 3Q17 Earnings: Can You Expect an Outstanding Show?

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Part 4
Valero's 3Q17 Earnings: Can You Expect an Outstanding Show? PART 4 OF 7

Valero’s Moving Averages ahead of 3Q17 Earnings

Valero’s moving averages

On July 3, Valero Energy’s (VLO) stock rose, as we discussed in the previous part of this series. Also, Valero’s 50-day moving average stood above its 200-day moving average. Since then, the stock has stayed above its 200-day moving average. Since July 3, VLO’s refining margin indicators have risen year-over-year as well as quarter-over-quarter. Plus, Valero published its 2Q17 earnings at the end of July, beating analysts’ estimate.

Valero’s Moving Averages ahead of 3Q17 Earnings

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Also since July 3, Valero’s 50-day moving average has been rising. Valero’s 50-day moving average stands 4% above its 200-day moving average. So, if the company faces any negative news with RINs (renewable identification numbers) prices, refining margins, or 3Q17 earnings, its stock will likely fall, and its 50-day moving average could break below its 200-day moving average. This news would be a very negative technical indicator.

Contrarily, any positive news could cause Valero’s stock to rise and its 50-day moving average to rise, enlarging the gap from its 200-day moving average. This change could shield the company from fear of its 50-day moving average breaking below its 200-day moving average.

So it’s now essential that VLO’s refining margins hold on to their higher levels or that RINs costs fall so that VLO’s stock and its 50-day moving average could rise. Also, if the company puts up solid 3Q17 earnings, they could support Valero’s 50-day moving average. Valero is expected to post its 3Q17 earnings on October 26.

Peers’ moving averages

Valero’s peers Andeavor (ANDV) and HollyFrontier’s (HFC) 50-day moving averages also stand 12% and 9% above their 200-day moving averages, respectively. Also, Marathon Petroleum (MPC), PBF Energy (PBF), and Phillips 66’s (PSX) 50-day moving averages stand 3%, 4%, and 5% above their 200-day moving averages, respectively. These differences show the bullishness in the entire refining industry.

The SPDR Dow Jones Industrial Average ETF’s (DIA) 50-day moving average also stands 5% above its 200-day moving average, showing the bullishness in the overall stock market.

In the next part of this series, we’ll estimate Valero’s stock price range before its earnings release.

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