Yesterday’s broad-market pullback was thorough in its infiltration of every sector to the point where even the seemingly untouchable energy and oil space wasn’t safe. Marathon Oil Corporation (NYSE:MRO) was one of these casualties, shedding 6.3% during yesterday’s trading, and falling to its lowest level since May 24. However, MRO is roughly two weeks removed from a seven-year high of $33.23, with yesterday’s pullback putting the equity back within striking distance of a historically bullish trendline on the charts.
The trendline in question, according to a study from Schaeffer’s Senior Quantitative Analyst Rocky White, is MRO’s 40-day moving average. Per White’s data, MRO has come within one standard deviation of this moving average after a lengthy period above it eight other times in the past three years. One month after four of these instances, the security was higher, averaging a 5.3% return. From its current perch at $29.73, a similar move would put Marathon stock at $31.31.
mro chart jun 14
Though calls are still outnumbering calls on an overall basis, a further unwinding of pessimism could put additional wind at MRO’s back. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 50-day put/call volume ratio that sits higher than 73% of readings from the past year. In other words, puts are getting picked up at a quicker-than-usual clip.
Now might be the time to join these options players. The security’s Schaeffer’s Volatility Scorecard (SVS) sits at 84 out of a possible 100. In other words, Marathon stock tends to exceed these traders’ volatility expectations, which is a good thing for buyers.