Shell’s 50-Day Moving Average Fell More

In the previous part, we discussed Royal Dutch Shell’s (RDS.A) stock performance. The stock has fallen 15% in the fourth quarter. In this part, we’ll discuss Shell’s moving average trend in the fourth quarter. First, we’ll review how the moving averages have trended in 2018.

In the first quarter, weaker broader markets and lower oil prices impacted Shell stock and its 50-day moving average. In the second quarter, the markets recovered and oil prices rose, which boosted Shell stock. As a result, Shell’s 50-day moving average increased. In the third quarter, the company missed its second-quarter earnings. Oil prices declined due to volatility, which caused Shell stock and its 50-day moving average to fall. Shell’s 50-day moving average broke below its 200-day moving average by the end of the third quarter.

In the fourth quarter, Shell published its third-quarter earnings. The earnings fell short of analysts’ estimate. Lower oil prices and equity markets in the fourth quarter, which we discussed in the previous part, impacted Shell stock and its 50-day moving average.

Shell’s 50-day moving average has declined 4% in the fourth quarter. A steeper decline in Shell’s 50-day moving average compared to a decline in its 200-day moving average has widened the gap between both of the moving averages. Shell’s 50-day moving average, which was 2% below its 200-day moving average at the beginning of the quarter, is 4% below its 200-day moving average—not a good scenario.

Going forward, only a sharp and consistent increase in Shell stock could make its 50-day moving average pass its 200-day moving average—a technically bullish sign.

Total’s (TOT) 50-day moving average trades 3% below its 200-day moving average. ENI (E) and Suncor Energy’s (SU) 50-day moving averages trade 5% and 8% below their 200-day moving averages, respectively. YPF’s (YPF) 50-day moving average is 14% below its 200-day moving average.