PreMarket Prep Stock Of The Day: Chevron

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

There's always a lot of attention paid to new issues that Warren Buffett adds to his portfolio when his 13F filing is released. Even though the activity reflects his purchases from the previous quarter (October-December) and may not correspond to its current price, investors pile in.

For example, when Buffett accumulated his Chevron Corporation CVX stake, it had a three-month range of $65.16-$95.82. Therefore, his average price is well below the preannouncement closing price of ($93.13 on Tuesday). Nevertheless, investors focused on the now and aggressively purchased shares of Chevron at it ended the session at $95.92.

To determine if the upward trajectory will continue, it's necessary to follow the corresponding price action.

Wednesday’s Price Action: After a $2 higher open, Chevron had a brief retreat but found buyers well ahead of the top of Tuesday’s range ($93.86), only reaching $94.20, and resumed its move higher. It was able to breach its November high ($95.92) but came up well shy of its June 8 high of $103.59.

It retreated to end the session at $95.92, its highest close since June 10 ($97.50) which came a few days after its major top.

Buffett Buys On Weakness: As previously stated, Buffett did not begin purchasing shares of the issue until October. Interestingly, the low for the last quarter was made in October at $65.16. The lion's share of the move came in November when it sprinted on a month-to-month basis from $69.50 to $87.18, and peaked during the month at $95.82.

Its December retreat found support at $83.35 and ended the month just off that level at $84.45.

Thursday’s Price Action: As of 12:15 p.m. ET, Chevron has traded in a $1.48 range ($94.30-$95.78). After a higher open, it could not regain Wednesday’s closing price ($95.92), only reaching $95.78 ($0.03 above the open) and reversed course. The ensuing decline came within a dime of Wednesday’s low ($94.20) finding buyers at $94.30. It has drifted back into the lower $95 handle.

Moving Forward: After some consolidation, Chevron is going to make its next move. For the next leg to be higher, a breach and a few closes above Wednesday’s high ($96.72) may pave the way for Chevron to return to triple digits.

On the downside, holding the double bottom from the last two sessions should keep the bulls in charge for the time being.