While all eyes in big oil have recently been on whipping boy BP plc (NYSE:BP), Exxon-Mobil Corp (NYSE:XOM) has dealt just find with its relative lack of attention. Exxon-Mobil has gained more than 16% over the past 8 weeks and ~7.5% over the last 10 trading days without posting even a single red day. At this point, it’s time everybody started taking notice (if you haven’t already). But after such a big run nearing a long-term gap fill, would it be foolhardy to consider buying Exxon-Mobil in this area?
Oil and commodity prices have benefited strongly from the increasingly inflationary environment spurred on by the Fed and, unwittingly, by inflationists. While investors may rue the fact that Exxon now finds itself somewhat ‘expensive’ relative to recent prices, there is no reason to think the upward trend of oil prices will be halted over the long term in the current environment. Over the short-term, however, XOM could see a modest pull-back. Bespoke notes that since 1980, XOM has enjoyed two prior 10-session win streaks, in 1985 and just over a year ago in October 2009. In both cases, the stock saw a pull-back of about 2% in the 10 days after each of those win streaks.
Despite entering a long-term gap through the $70 area, Exxon-Mobil could have room to run to 2009 highs above $76 and higher. Often, such impressive win streaks are the start of something bigger. In the aforementioned move from October 2009, for example, the stock pulled in to $71 after an 11-day run from $67 to $75, but then extended back above $76 before tailing off hard in December. The past cannot predict the future, but it can provide clues. Perhaps look for a modest pull-back before getting involved in Exxon-Mobil, the biggest company in the world.
