Exxon, Chevron Present Short Opportunities as Energy Sector Surges
Some conflict-induced volatility in the oil industry has inspired a trade idea.
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Exxon Is the Buying Opportunity in Big Oil Right Now
“Many Americans have been concerned to see the recent rise in gasoline prices. This short-term increase has been entirely the result of the Iranian regime launching deranged terror attacks against commercial oil tankers and neighboring countries that have nothing to do with the conflict.”
-President Donald J. Trump, April 1, 2026
"Well, though I understand the reasons behind the campaign, aren't those terror attacks part of the conflict?"
-Your author
Anyone Else Notice?
That, as of March 27, FactSet's weekly series "Earnings Insight" showed Q1 2026 energy sector earnings growth at 5% annually, up from expectations for 0.3% growth at the start of the quarter?
Anyone else notice that Q1 energy sector revenue growth stood at 1.3% on March 27 versus expectations for "growth" of -3.15% at the start of the quarter? Anyone else notice that the energy sector, as of March 27, was trading at 20.2-times forward-looking earnings versus a five-year average of 12.9 times and a 10-year average of 13.8 times?
This makes energy the most overvalued sector relative to its own history among the 11 S&P equity sectors and it is not close. Can this energy surge, which has been reignited overnight into Thursday, continue?
Charts
Readers will see that Exxon Mobil (XOM) is perhaps a little more than halfway through developing a potential head-and-shoulders pattern of bearish reversal that would, if the pattern is completed, form a pivot in the $146/$147 area. This spot would also be almost precisely where a 38.2% Fibonacci retracement level for the entire year-long rally emerges.
A similar pattern and similar scenario merges on the daily chart of Chevron (CVX) . The potential downside pivot here would be in the $183/$184 area. Even if these stocks find support at pivot and the potential pattern fails, there's enough downside room here to make some lunch money on the short side.
Trade Idea
My thought is to short a small amount of either XOM or CVX or both. I definitely intend to go lightly.
We're trading here, not investing and not willing to risk next month's mortgage payment. Remember, if going short at least 100 shares of either or both of these names, to limit the potential damage through the purchase of upside calls. While this will damage potential max profitability, this is a key step in not having one's face ripped off in a volatile market.
Related: Asia’s Top Performer Touches Bear Market, But Is Still Up Big in 2026
At the time of publication, Guilfoyle had no positions in any securities mentioned.
