Hey There Income Hunters,
In late January, I wrote a bullish Power Income report on Exxon Mobil Corp (Ticker: XOM) and shared the trade I put on. See it below …
We haven’t even gotten a federal infrastructure spending package (yet), but …
My trade is already up 70% — a 2,100% annualized return!
The Power Income Valuation Model has a $73+ fair value price for XOM based on earnings per share and dividend growth …
However, the new high of 52.36 on Monday was not met with a new high in the Relative Strength Index (RSI) — a very helpful momentum indicator — meaning we got a negative price/RSI divergence … which is a great signal for reversal patterns.
A key Power Income Rule is Respect the RSI, so I took profits and will look to reset the trade a little bit lower …
Bring it Home
The RSI Divergence is a very helpful technical tool for Income Hunters…
A negative divergence is constructed in three simple steps:
Price makes a new high and RSI does the same
Price corrects then continues higher and makes a new high
RSI fails to make a new high
In the “Big Picture” the energy sector has a long way to go.
XOM was turbo-charged the past few sessions, so now is GREAT timing to sell a rich stock and move into an undervalued one.
Tomorrow we’ll analyze British Petroleum (Ticker: BP), which I think offers great value.
Until then …
Live and Trade With Passion My Friends,