XOM Follow Up

XOM was a trade idea (short) that I covered in some detail on March 24th, it is down somewhere around 5% since then, however it is the longer term that makes XOM attractive as a large double top that looks pretty ripe for a break. Since I covered XOM in great detail on the 24th (linked above), I'll just touch on the macro situation and concentrate a bit more on the tactical situation.

 The gist of the idea was that these two H&S tops in XOM are part of a larger double top, the pattern implied target for a double top in XOM (of course this would be a longer term trend) would be around $45.

 This is the most recent H&S top, which I believe is the second top of a larger double top, it broke support yesterday, which means we would expect to see a volatility shakeout to the upside.

 The daily MS chart appears to agree this is a double top.

 The longer term charts can be found in the original post, it is the shorter term tactical entry that I'm more concerned with. I don't know that XOM will be able to post a severe shakeout to the upside being the market accumulation for a bounce wasn't huge. Or in other words, after the market bounce which we first expected yesterday and then saw it setting up as the day went on, I'd think XOM would have trouble moving up against the market's move down once the bounce is complete. In the near term, although XOM is just below the neckline, the short term charts suggest the volatility shakeout move as you can see the positive divergence here on  2 min chart and below on a 1 min chart.

At this point the best I can do is guess as to the probable target and the area in which I would like to look at XOM for a short entry, I'm thinking around $84.50, although we'll have to let the market tell us and 3C to confirm the best entry point, but for now, I'll be setting alerts for price in this area to take a look at XOM and see if the short term charts reverse to distribution on the move.

I suppose if you are a longer term trader and don't mind sitting through some volatility, you might consider phasing in to XOM. When phasing in, I prefer a 3 step phase in period. I might consider adding 1/3 or 1/4 of the intended position here, that gives some coverage in case XOM turns violently down. The next 1/3 or 25% I would be looking to add in the target area or perhaps above if we can get it, at this point I would want to see some 3C distribution taking place. The last portion I would add when XOM shows me that it is breaking below the neckline again just below $83. There are several variations of this phasing in theme, if there's a decent shakeout move higher then the target area and 3C is VERY negative, I might consider adding the rest of the position there, that method gives you  a little better risk profile as a stop can be placed closer to the bulk of the entry.

I would set some price alerts if you are interested in XOM and feel free to contact me for 3C updates.