Stock Of The Day: Exxon Mobil Breaks Out

Exxon Mobil Corporation (NYSE:XOM) has broken out. The stock is trading higher because Israel's attack on Iran has spooked the oil markets.

As Exxon Mobil’s extensive oil holdings increase in value, the company itself becomes more valuable — and the stock tends to rise along with it.

It looks as though the move higher may continue. It may also be about to refill a gap. This is why our trading team has made Exxon our Stock of the Day.

As you can see on the chart, there was resistance for the shares around $109.50.

Resistance is a price level where there are large amounts of shares for sale. This is why rallies pause or end when they reach them. Buyers can acquire all the shares they wish without pushing the price any higher.

Sometimes stocks reverse and move lower after reaching resistance. This is what happened to Exxon in May.

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But sometimes when a stock reaches resistance, the sellers run out of shares to sell. The buyers eventually overpower them and the price moves higher. This is called a breakout and it just happened with Exxon.

Breakouts tend to be followed by uptrends.

With the sellers leaving the market, new buyers will have no choice but to outbid each other and pay higher prices if they want to draw sellers back in. This could lead to a snowball effect that forces the shares into an uptrend.

If Exxon continues to rally, there is a good chance it runs into more resistance around $118. This level was a top or peak in March and there tends to be resistance at former peaks.

There are people who purchased shares at the peak who have regretted doing so ever since. They have held onto their losing positions since then, but if the stock gets back to their buy price and they can sell at breakeven, they will.

This selling by these remorseful buyers could put a top on the price. That makes it a logical place to have that level as a sell target.

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