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Technical Analysis: XOM

Published on June 4, 2009 by in Research

When an observer with a trained eye looks at Exxon Mobil’s (NYSE: XOM) 3 month stock price chart, an interesting picture presents itself.

For those of you who do not have a CTA, you’d look at that and see a normal chart, nothing that screams “Trade Me.” But for those of us who are more gifted in the technical arts, we hear voices screaming in our heads saying “Buy Buy Buy” in the days surrounding April 20th. That’s because during that span of time XOM was trading within the “neck” range of a text book Bactrian Double Hump & Pump formation. Let me tease it out for you.

As you can see, the chart is clearly showing a picture of a two hump camel. And if you know anything about two hump camels, you know that when you are traveling from butt to head, after you clear the second hump their neck declines precipitously before a rapid ascent. If you can buy a stock in that desirable neck range, you are likely to experience a short term pop. This is a historically* proven tradeable phenomenon. Here is an overlay of an actual two hump camel:

Aside from the neck, after you plateau in the head range you enter an uncharted area. The stock price becomes dependent upon whether the man holding the reins of the camel decides to jump or not, something that is unknowable to even the most gifted technical analyst.

*Definition of “history” employed in this context is not universally accepted, but is permissable under SAAP

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