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VLO’s 50-Day Average Broke below Its 200-Day Average in November

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Valero’s moving averages in 2018

In the previous article, we learned that Valero Energy (VLO) stock has fallen 30% in the current quarter. Now let’s look at the stock’s moving average trend in the period. Before that, though, let’s briefly review how Valero’s moving averages have trended in 2018.

In the first quarter, Valero’s 50-day moving average stood above its 200-day moving average led by robust fourth-quarter numbers. Further, in the second quarter, a stronger refining environment boosted Valero stock and its 50-day moving average. The uptrend continued in the third quarter, keeping Valero’s 50-day moving average above its 200-day moving average.

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Valero’s moving averages in the fourth quarter

In the current quarter, Valero stock has slumped, leading to a 16% fall in its 50-day moving average. Valero’s 50-day moving average broke below its 200-day moving average in November. Usually, when a short-term moving average breaks below a long-term moving average, it is considered a technically bearish sign.

Valero’s 50-day moving average, which stood 9% above its 200-day moving average in the quarter, now stands 9% below its 200-day moving average. Because there’s a wide gap between both moving averages, only a steep and consistent surge in the stock would be able to reverse the 50-day moving average’s downtrend.

Peers’ moving averages

Valero’s peers Marathon Petroleum’s (MPC) and Phillips 66’s (PSX) 50-day moving averages stand 3% and 4% below their 200-day moving averages, respectively. Delek US Holdings’ (DK) 50-day moving average stands 13% below its 200-day moving average.

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