Entries in Triple Top (2)
Triple Top in Exxon Mobil (XOM) Weighs on Broad Market
Price Patterns
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PrintIn late March, I alerted readers to a triangle forming in Exxon Mobil (XOM). The stock broke out from its triangle and continued higher in textbook fashion. The upward trend was steady and pretty easy to trade. Importantly, XOM's breakout and follow-through rally helped the S&P 500 ($SPX) and Dow Jones Industrial Average ($INDU) move higher.
You see, XOM is the largest stock in the U.S. by market cap. As of this morning, XOM's market cap is around $492 billion. This makes XOM the largest component in the S&P 500, which is a market cap weighted index. XOM represents a little over 4% of the S&P 500.
Also, XOM is a high priced stock (don't confuse this with valuation). At $92, XOM is high in share price. XOM accounts for about 5.9% of the Dow Jones Industrial Average. IBM (IBM) is the biggest component of the Dow, accounting for about 7.9%.
As of this week, XOM is rolling over from a triple top at the $95 level. It could cause the broader market to pause. That's not to say the S&P 500 and Dow can't go higher. It's just going to be a little more difficult without the help of XOM.
Triple Top in Euro Could Spell Trouble for Stocks
The rise in the dollar was behind some of the weakness in stocks on Tuesday. This dynamic could continue in the short-term.
A stronger dollar is bad news for stocks, plain and simple. One of the best ways to watch for a strengthening dollar is via the Currency Shares Euro Trust (FXE). If the FXE is going higher, the dollar is weakening. If the FXE is going lower, the dollar is strengthening.
Notice the big drop in the FXE today, coincident to the 370 point drop in the Dow Jones Industrial Average.
The FXE has a curious technical set-up. If today's drop halts, then the FXE could still be on track to complete a bullish wedge. Conversely, if the FXE drops below 145, we'd get confirmation of the triple top. Such a drop would continue to pressure stocks.
