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STATISTICS


ExxonMobil Runs Out Of Gas

10/05/11 09:22:58 AM
by Alan R. Northam

Statistical analysis shows that the bull market in ExxonMobil has run its course and a new bear market has begun.

Security:   XOM
Position:   N/A

The lower panel of Figure 1 shows the long-term statistical analysis of ExxonMobil (XOM). This figure shows the 200-day linear regression trendline (solid blue line), the upper one sigma channel line (dotted red line), the lower one sigma channel line (dotted green line), the lower two sigma channel line (solid green line), and the lower three sigma channel line (dashed green line). Besides their statistical significance, the red channel lines act as resistance and the green channel lines act as support.

FIGURE 1: XOM, DAILY. This chart shows the daily price chart of ExxonMobil (XOM) in the lower panel along with its upsloping 200-day linear regression trendline and its associated upper and lower channel lines. The top panel shows the linear regression slope indicator followed by the R-squared indicator. This chart shows ExxonMobil breaking down below the lower three sigma channel line in early August 2011 to begin a new bear market trend.
Graphic provided by: MetaStock.
 
Note that from July 2010 through the end of April 2011, price hugged closely to the linear regression trendline (solid blue line), an indication of a strong bull market trend in progress. However, in early May 2011 price fell to the lower one sigma channel line, where it found temporary support. In early June, price fell to the lower two sigma channel line, where it again found support. In late June, XOM mounted a failed rally that ended in late July, after which price fell all the way to the lower three sigma channel line, where it once again found some temporary support. Price has now moved solidly below the lower three sigma channel line to signal a change in trend from a bull market to a bear market taking place.

Looking at the linear regression slope indicator in the top panel of Figure 1, note that in mid-September this indicator has broken down below its zero line to indicate that a new bear market trend has been established. The next lower panel shows the R-squared indicator having moved above its critical level in late September, indicating a 95% confidence level that this new primary bear market trend will continue.

In conclusion, this statistical analysis shows that ExxonMobil has run out of gas and is no longer running in a long-term bull market trend but has fallen into a new bear market. As long as the linear regression slope indicator continues to move down below its zero line and the R-squared indicator continues to move up above its critical level, the bear market trend will continue.



Alan R. Northam

Alan Northam lives in the Dallas, Texas area and as an electronic engineer gave him an analytical mind from which he has developed a thorough knowledge of stock market technical analysis. His abilities to analyze the future direction of the stock market has allowed him to successfully trade of his own portfolio over the last 30 years. Mr. Northam is now retired and trading the stock market full time. You can reach him at inquiry@tradersclassroom.com or by visiting his website at http://www.tradersclassroom.com. You can also follow him on Twitter @TradersClassrm.

Garland, Tx
Website: www.tradersclassroom.com
E-mail address: inquiry@tradersclassroom.com

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