By Nicholas Santiago on March 12th, 2010 12:57pm Eastern Time
Exxon Mobil Corp (NYSE:XOM) is one stock that is not at new highs for the year. In fact the stock topped out on November 25th, 2009 at $76.50 a share. Since that time Exxon Mobil Corp has sold off into the low $60.00 dollar range before finding some support. Technically the stock still looks pretty poor on the daily chart and could trade back down if the major market pulls back from it's recent surge.
While Exxon Mobil Corp's stock may appear weak on the daily charts this stock is a great intra-day stock market barometer. When this stock trades into a resistance level and pulls back often the market will do the same . The same case can be made when the stock trades lower into support and bounces often the market market will follow the reaction of Exxon Mobil Corp. Trader's can correlate these Exxon Mobil Corps stock moves with SPDR Dow Jones Industrial Average ETF (NYSE:DIA), or the SPDR S&P 500 ETF (NYSE:SPY) intra day and see how well it works.
Why does this phenomenon occur? Perhaps the market indexes follow Exxon Mobil Corp so well because it is such a large component of the Dow Jones Industrial Average and the S&P 500. Exxon Mobil currently has the largest market capitalization of any stock in the market at around $306 billion dollars. The next highest market cap is Microsoft Corp (NASDAQ:MSFT) at $246 billion dollars. I suppose this is the power of being the king of the hill.
Please realize that these correlated moves with Exxon Mobil Corp and the markets are not proportional, however, they are reactionary.
Comments