Ever since crude bottomed in mid-February, Jim Cramer has been convinced that oil could easily bounce back to $50 a barrel. That was a bold call to make back when it was in the $30s, but it became a reality on Tuesday when oil closed at $48.
Unfortunately, stocks in the oil patch may not continue to get a lift from rising oil prices.
To find out what could be in store for the future of major oil and oil service stocks, Cramer spoke with Robert Moreno, a chartist, publisher of RightViewTrading.com and colleague of Cramer's at RealMoney.com.
Back in February, Moreno took a look at the charts and correctly predicted that Exxon Mobil, Chevron, Schlumberger and Pioneer Natural Resources were poised to head higher. However, this time around Moreno believes that the rally in the oil sector is overdone.
"When Moreno now says the group could be due for a near-term pause or even a pullback, I think we need to take him seriously," the "Mad Money" host said.
The first chart Cramer looked at was Exxon Mobil, which rallied nearly 11 percent since mid-February. Moreno noted that even though the MACD line and the chaikin money flow oscillator — the measures of volume of buying and selling pressure — remained positive, they have both flattened out. That suggested to Moreno that Exxon has less momentum.
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"Put it all together, and Moreno believes Exxon is due for a pullback, although whether it will be a brief dip or a severe pounding is hard to say," Cramer said.
Moreno also worried that the rally in Chevron could be running out of steam. Three weeks ago the stock reached $103, which was a critical Fibonacci level where the stock's trajectory tends to change. Sure enough, the stock has been trading sideways ever since.
If Chevron breaks down below $98.75, Moreno expects the stock to get slammed.
As for oil service company Schlumberger, Moreno noted that the stock already rallied to $81 from $72 in late April before giving up gains. Since then, the chart displayed a head and shoulders pattern, which is one of the most reliably negative formations out there. At this point, Moreno wasn't sure which way the stock will jump, but the chart is certainly less positive than before.
Ultimately, the charts indicated to Moreno that the magnificent run in oil stocks could be coming to an end soon.
"Even if you believe the oils have more room to run, remember that nobody ever got hurt taking a profit," Cramer said. (Tweet This)