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Alert: Chevron Showing Signs Of Top

|Includes: Chevron Corporation (CVX)

 Chevron Corporation (NYSE:CVX) has started to stall out and fall back to earth after a record breaking run. The stock has a rounded top in place and today is trading sharply lower at $102.18, -1.59 (-1.53%). Even with oil trading flat to higher, Chevron is unable to catch a bid.  The United States Oil Fund LP (NYSE:USO) is trading at $42.27, -0.04 (-0.09%).

Over the last couple weeks Chevron has formed this rounded top. Usually, this pattern, when it occurs at the top of a chart after a major run, signals distribution. It is very likely distribution has occurred as the institutions have unloaded into the retail investor.  Once the retail investor is in the stock, it will fall.

In July, 2010, Chevron traded as low as $66.83. On March 1st, 2011, Chevron hit a high of $104.99. This is an amazing 57% increase. For a company the size of Chevron, that is almost unheard of. The key to the rounded top also lies in the $104.99 level. This happens to be a magical double top from May 2008. This adds credence to the resistance point and likely pull back.

Should Chevron pull back, the first area of major support would be at $100.00, then $98.25 and finally $96.50. The weakness today in Chevron, the double top from 2008 and the rounded top on the daily chart all signal the pull back is here to stay.

Related: Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP).

Gareth Soloway