Stocks ripped higher today as bulls took back control following a frustrating bearish reversal yesterday. The Dow, S&P, and Nasdaq Composite all soared this afternoon.
The S&P is trading right near resistance (yellow line) after rebounding off support last week as a result. We predicted a rally back to resistance when support was hit.
Now, a plunge back down to support could easily be on its way, too. The stochastic indicator shows that the S&P is nearing overbought territory (a reading of >80), and the index closed at the upper Bollinger Band as well.
A retracement shouldn’t at all be unexpected given the market’s recent price action. We’re still in a bear market, after all. Traders are more interested in “selling the rips” than “buying the dips” these days.
But today’s gains might stick if the Reuters Nord Stream 1 report, which likely caused stocks to spike higher this morning, ends up being true.
Reuters reported that, despite Gazprom’s force majeure that would release it from its obligations to provide natural gas to Germany via the Nord Stream 1 pipeline, Russia now plans on supplying Germany with gas after the pipeline’s 10-day maintenance is completed on July 22nd.
“They (Gazprom) will return to the levels seen before July 11,” according to a source close to the matter.
Euro stocks rallied strongly in response to this information, leading US stocks higher at the open. Then, short-covering bears drove stocks into the stratosphere as a short squeeze got underway. The market’s most shorted names all jumped.
Crypto gained strongly, too, alongside oil stocks.
And among the market’s many stocks that rallied today, perhaps the most intriguing was Chevron Corp (NYSE: CVX). Yes, all the oil stocks did very well prior to their rapid June selloff.
But CVX was unique in that it enjoyed a mostly consistent vertical ramp from September 2021 to March 2022 while other oil names were bouncing around the whole way up.
Now, CVX is giving traders another shot to go long before the next big rally. The stock rebounded off support from February 22nd last week and closed above two moving averages (10-day, 20-day) this afternoon.
CVX also closed above its bearish trend (yellow trendline), and the stochastic indicator is showing bullish divergence (a higher low) relative to the stock’s price action (a lower low).
Plus, CVX is less correlated with the general market. So if the SPY retraces to support, CVX could still rise.
That’s why it might make sense to take the stock long with a trade trigger of $146.46, above today’s high, as the general market eyes its next move amid continued volatility.
