With the price of crude taking a nosedive after a tremendous run above $30, Jim Cramer wanted to get a sense about where major oil stocks could be headed.
"I'm a big believer in the lower-longer thesis — the idea that crude will stay down, likely for the rest of the year until he hedges expire at most of the American producers — but there's a lot of emotion invested in which way oil is going to jump," the "Mad Money" host said.
That is why Cramer turned to Robert Moreno, a chartist, publisher of RightViewTrading.com and a colleague of Cramer's at RealMoney.com. Specifically, Cramer was interested to know what the charts indicated for the large integrated oil and oil service plays if crude holds above $30.
Overall, Moreno found that the technicals were sound for Exxon but is skeptical that the stock could continue to roar higher. Until the volume gets more positive, he suggested holding off.
Next up was Chevron, which was much more compelling for Moreno. Last week, the stock finally broke above a key level of $85 and is only a few points away from another ceiling of resistance at $89. Ultimately Moreno was more bullish on Chevron than he was about Exxon.
But it was the biggest losers of the oil patch that worried Cramer, as he thinks if oil drops to $10 it is the financials that have a large amount of energy exposure could be the true oil victim, second to the oil stocks themselves.