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Analyzing Valero Energy and Phillips 66’s Moving Averages

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Refining stocks’ fall in the fourth quarter

So far in the fourth quarter, Marathon Petroleum (MPC), Valero Energy (VLO), HollyFrontier (HFC), and Phillips 66 (PSX) have fallen. We discussed the stocks’ returns in the previous part. In this part, we’ll discuss the trend in their moving averages.

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50-day moving averages declined

Refining stocks’ 50-day moving averages have declined sharply in the fourth quarter due to weakness in their stock prices. The weakness has caused Valero Energy and Phillips 66’s 50-day moving averages to break below their 200-day moving averages. Usually, if a stock’s 50-day moving average breaks below its 200-day moving average, then it’s considered to be a technically bearish sign. Valero Energy’s 50-day moving average is 4.4% below its 200-day moving average. Similarly, Phillips 66’s 50-day moving average is 1.8% below its 200-day moving average.

The gap between refining stocks’ 50-day moving averages and 200-days moving has contracted in the fourth quarter. Marathon Petroleum’s 50-day moving average, which was 9.3% above its 200-day moving average on October 1, is 1.1% above its 200-day moving average. The gap between HollyFrontier’s 50-day moving average and 200-day moving average has declined from 16.0% to 4.0% during the same period.

Despite the narrowing gaps, Marathon Petroleum and HollyFrontier’s 50-day moving averages continue to stand above their 200-day moving averages—a technically favorable sign. However, the gap for both of the moving averages is marginal. There are concerns about another decline in Marathon Petroleum and HollyFrontier’s stock prices. Their 50-day moving averages could break below their 200-day moving averages. These refining stocks should maintain the current levels and stay in a technically favorable zone.

Next, we’ll discuss Marathon Petroleum, HollyFrontier, Valero Energy, and Phillips 66’s price forecast until the end of the fourth quarter.

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