Has Chevron Stock Mirrored SPY ahead of 1Q18 Earnings?



Chevron’s stock performance

In the previous part of this series, we considered Chevron’s (CVX) segmental outlook for 1Q18. Now, we’ll examine Chevron’s stock performance before its 1Q18 results. Chevron stock has fallen 6.5% since January 2. Oil prices as well as markets impact integrated energy stocks like Chevron, so let’s have a look at their performance in 2018.

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WTI rises in 2018

In 2018, WTI has been volatile with a rise in January, a fall in February, and again a rise in March. In April so far, oil prices have risen. Overall, WTI (West Texas Intermediate), amid volatility, has risen 11.1% in 2018. Oil prices in February declined due to an expected rise in US oil production and inventories. However, in March, Saudi Arabia planned to extend production cuts in 2019. Plus, mounting stress between the United States and Iran further supported oil prices. Plus, current geopolitical unrest in the Middle East has driven oil prices to three-year high. For more, see Is Oil’s 3-Year Peak Driving Energy Stocks Higher?

SPY falls in 2018

Now let’s look at the SPDR S&P 500 ETF (SPY), the broader market indicator. SPY rose in January by 4.9% but declined in February by 3.5% and in March by 1.7%. However, in April so far, SPY has risen 3.3%. The US market fell in March due to an interest rate hike, followed by a fear of a trade war with China. For recent market performance, see Is Rise in US Manufacturing PMI Helping Business Climate?

Overall, the SPDR S&P 500 ETF (SPY), the broader market indicator, fell 1.1% since January 2. Implied volatility in SPY rose by 8.2 percentage points over January 2 to the current level of 15.1%.

Also, considering moving averages, we see that the weakness in SPY affected its 50-day moving average (or DMA). SPY’s 50 DMA, which stood 7.1% above its 200 DMA on January 2, now stands 3.7% above its 200 DMA. However, the fact that SPY’s 50 DMA still holds above 200 DMA is a favorable sign.

In short

If we consider the trend in 2018, we can see that Chevron stock moved in line with SPY, which fell 1.1% compared to WTI, which rose 11.1%. Chevron stock fell in January and February but rose in March and April month-to-date. So the steep decline in Chevron stock in February, in line with SPY, led to an overall fall in the stock since January 2.

Chevron’s peer ExxonMobil (XOM) has also fallen 9% since January 2. Comparatively, Royal Dutch Shell’s (RDS.A) stock has remained flat in the period. However, global integrated energy stocks BP (BP), Total (TOT), and Petrobras (PBR) have risen 2%, 8%, and 33%, respectively, since January 2.

In the next part of this series, we’ll consider how Chevron’s moving average crossovers.


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