Why Chevron’s 50-DMA Is Only 0.8% above Its 200-DMA



Chevron’s moving averages

In the previous part of this series, we saw that Chevron (CVX) stock has fallen 4% in the current quarter. Now let’s look at Chevron’s moving averages trend this quarter. But first, let’s briefly review how moving averages trended in 2018.

In the first quarter, Chevron’s 50-DMA (day moving average) declined, led by the fall in its stock, which was impacted by weaker markets. In the second quarter, CVX’s 50-DMA broke below and again crossed over its 200-DMA led by the rise in Chevron stock. CVX rose due to better first-quarter earnings and higher oil prices in the second quarter.

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Chevron’s moving averages in the current quarter so far

At the beginning of the current quarter, CVX’s 50-DMA was much higher than its 200-DMA. However, during the quarter, CVX’s 50-DMA fell due to a decline in its stock. That led to a narrowing of the gap between both its DMAs. Its 50-DMA, which was 4.3% above its 200-DMA on July 2, was now 0.8% above its 200-DMA.

If Chevron stock declines further, its 50-DMA could fall and easily break below its 200-DMA. When a shorter-term DMA breaks below a longer-term DMA, it’s considered a technical bearish signal. So it’s essential for Chevron stock to hold on to the current levels to avoid entering a technically bearish zone.

Peers’ moving averages

Like CVX, ExxonMobil’s (XOM) 50-DMA trades 0.6% above its 200-DMA. Similarly, PetroChina’s (PTR) and Royal Dutch Shell’s (RDS.A) 50-DMAs trade 1% and 0.4%, respectively, above their 200-DMAs. BP’s (BP) 50-DMA stands 3.3% above its 200-DMA.


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