Not all energy names have been participating in the drawdown until recently, and the one I think that is on the verge of cratering is Tesoro. Though management provided a very rosey forward guidance at their analyst day yesterday (see link http://finance.yahoo.com/news/bank-america-reiterates-tesoro-following-122031806.html), the chart technicals are still telling me that there is bearishness ahead.
Take a look at this 2 year chart of Tesoro. There are typically 2 technical indicators I like to follow, which are the MACD and the CCI indicator.
The MACD helps us spot divergences, when price is moving one direction but the MACD is moving in the opposite. Price usually ends up resolving in the direction of the MACD divergence. For Tesoro, there was a Bearish MACD divergence from February - April 2013.
The CCI indicator, is a faster momentum indicator, and helps to spot price rejection zones. It also spots divergences, but can also be used for buy/sell timing signals. In March 2013, the CCI indicator flashed a sell signal when it broke below the zero line. From that point, TSO dropped from $57 to $47 during the month of April (-17% drawdown) as both momentum indicators went into bearish territory and eventually bottomed at extreme levels (see orange rectangles on the chart, when CCI dropped to -290, and MACD dropped to -1.67).
Fast forward to the more recent price action, and you can see that we have the makings of the same MACD and CCI bearish divergences, combined with a CCI sell signal a few days ago. I forsee prices dropping to $71 in the next 2 weeks and possibly down to $66 if there's a complete gap fill down to $67-66 (which coincidentally would be a 17% decline in prices like Apr 2013).
Taking a look across Tesoro's peer group, you can see that all of these companies are cratering to the downside as both the price of Brent and WTI crude continue to fall.
From a valuation perspective, Tesoro's forward p/e of 11.95 is at a premium compared to peers VLO, MPC, HFC, PSX. Eventually, Tesoro's stock price will need to fall in line with its peers from a valuation perspective so it has that against it as well.
All of these factors point to lower prices for Tesoro in my opinion.
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