A Closer Look at Shell’s Moving Averages in 1Q18



Shell’s moving averages in the past four quarters

In 1Q17, despite the fall in Royal Dutch Shell’s (RDS.A) stock, its 50-day moving average (or 50 DMA) stayed above its 200-day moving average (or 200 DMA). Shell stock’s downtrend paused in the second quarter, likely in expectation of earnings. Shell published its 1Q17 numbers, which exceeded its estimates. But as WTI continued the plunge, it likely pressured Shell’s stock.

In 3Q17, Shell’s 50 DMA remained above its 200 DMA. While Shell stock mainly moved up and down with oil prices in 3Q17, solid 2Q17 numbers likely helped prices. Shell’s 50 DMA surged in 4Q17 due to a rise in Shell’s stock, presumably due to an increase in oil prices.

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Shell’s moving averages in 1Q18 so far

In 1Q18, Shell published its 4Q17 earnings. Shell beat earnings estimates for 4Q17 as its upstream earnings rose year-over-year. However, weaker broader markets and lower oil prices in February, as we discussed in the previous part of this series, led to the decline in Shell’s stock. So the fall in the stock led to a decline in its 50 DMA and a narrowing of the gap between its 50 DMA and 200 DMA—not a favorable sign. Shell’s 50 DMA, which stood 11.2% above its 200 DMA at the start of 1Q18, on January 2, 2018, now stands 9.6% above its 200 DMA.

Peers’ moving averages

Shell’s peers’ 50 DMAs also trade above their 200 DMAs. Total’s (TOT) 50 DMA trades 6.2% above its 200 DMA. Also, Statoil (STO) and Petrobras’s (PBR) 50 DMAs trade 14.3% and 26.1% above their 200 DMAs. PetroChina’s (PTR) 50 DMA stands 8.7% above its 200 DMA.

Like Shell, the broader market indicators—the SPDR Dow Jones Industrial Average ETF’s (DIA) and the SPDR S&P 500 ETF’s (SPY)—saw their 50-day moving averages trade 8.8% and 4.7% above their 200-day moving averages, respectively.

For Shell’s 15-day stock price estimate, read on to the next part of this series.


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