Valero and Marathon Petroleum Stocks Poised for Potential Rebound

The shares of Valero Energy Corporation VLO and Marathon Petroleum Corp MPC have faced significant losses in the past month, each dropping nearly 20% due to a recent sell-off in oil.

Market Analysis and Potential Recovery

Despite these declines, both stocks show signs of a possible reversal and rally, making them our Stocks of the Day.

Understanding Technical Analysis through Psychological Insights

Many analysts and traders often misunderstand technical analysis. They focus on identifying patterns on charts without grasping the underlying price action that contributes to these formations. By viewing technical analysis through the lens of psychology, the patterns become clearer and more relatable.

Recognizing Resistance and Support Levels

Consider patterns such as double tops and triple tops, which can signal potential reversals. A double top forms when a stock creates two peaks before reversing downward. Similarly, a triple top features three peaks.

A peak may develop at a previously established high because some investors who bought at that price regret their decision when the price subsequently declines. When the price returns to that peak level, these investors often sell off to cut their losses.

Potential for a Market Turnaround

A large concentration of sellers can create resistance at key levels. Conversely, a double bottom pattern indicates a potential price reversal that suggests an upward movement for the stock.

Stocks like Valero and Marathon are showing potential for recovery. When a stock hits a former bottom price, buyers may emerge, driven by a desire to reclaim shares they previously sold at that price.

This situation may foster support at the prior support level, where regretful sellers look to buy back in. Should enough investors place buy orders, this demand could establish a firm support base, prompting a rally.

It’s not uncommon for stocks to experience rebounds off support. If buying momentum builds, it can trigger competitive bidding among investors, potentially leading to significant upward movements for Valero and Marathon stocks.

In Conclusion

Read Next:
• Kroger Q4 earnings: EPS Beat, Sales Miss, Soft Outlook And More

Photo: Shutterstock