This oil giant has nothing left in the tank: Technician

Brazil's Petrobras has soared this year, but one technician thinks the oil giant's run is about to end.

On a weekly chart of Petrobras, Rich Ross of Evercore ISI drew what he saw as a "well-defined downtrend" that shows the semipublic Brazilian oil company falling for the past eight years.

Also troubling, according to Ross, is that the relative strength indicator (RSI), which essentially measures how overbought a stock is, has reached highs unseen since October 2007 before Petrobras came crashing down.

"We have some symmetry here, which is troubling for a stock that has rallied 300 percent off its lows and is up 200 percent year to date," Ross said Wednesday on CNBC's "Trading Nation."

So not only is Petrobras falling in line with what he sees as a downtrend, but Ross also believes that the Brazilian oil company has been overbought. Couple this with the recent drop in crude prices and Ross sees trouble ahead for Brazil's jewel oil producer.

Petrobras also accounts for 10 percent of the Brazilian stock market, which has risen 46 percent year to date as the country's main oil company has also surged. In other words, Brazil's Ibovespa could see a big drop should Petrobras tank.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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