Occidental Petroleum Corporation OXY gapped up slightly on Monday before falling to trade flat. Occidental is set to print its fourth-quarter financial results after the market closes.
When Occidental printed mixed third-quarter earnings on Nov. 8, the stock slid almost 10% the following day, but rallied almost 12% over the three trading days that followed to reach a high of $75.78 on Nov. 14. Between that date and Monday, Occidental has declined about 22% within a downtrend.
For the third quarter, Occidental reported earnings of $2.44 per share on revenues of $9.501 billion. The company missed the consensus estimate of EPS of $2.46 and slightly beat the $9.5 billion revenue estimate.
For the fourth quarter, analysts, on average, estimate Occidental will report earnings per share of $1.80 on revenues of $8.66 billion.
Ahead of the event, Evercore ISI Group analyst Stephen Richardson downgraded Occidental from In-Line to Underperform and lowered the price target from $74 to $60.
From a technical analysis perspective, Occidental’s stock looks bearish heading into the event, having settled into a possible bear flag on the daily chart. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat. A company’s guidance for subsequent quarters, which is often provided during a conference call, can also heavily affect a stock’s direction.
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The Occidental Chart: Occidental’s possible bear-flag pattern started to develop on Feb. 14, with the downward sloping pole formed between that date and Feb. 22 and the flag printing over the following days. If the stock suffers a bearish reaction to its earnings print and the pattern is recognized, the measured move is about 13%, which suggests Occidental could fall toward the $51 mark.
- Occidental is trading in a downtrend, with the most recent lower high formed on Thursday at $59.87 and the most recent lower low printed at the $58.01 mark on Friday. If Occidental trades lower on Tuesday, bullish traders will want to see the stock rebound from that level, or the downtrend will continue.
- If Occidental receives a bullish reaction to its earnings print and is able to rise up to regain the eight-day exponential moving average as support, the bear flag and downtrend will be negated and an uptrend could form.
- Occidental has resistance above at $59.60 and $63.24 and support below at $56.62 and $54.67.
Read More: This Occidental Petroleum Analyst Gives 4 Reasons For Turning Bullish
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