Technicals | Shell (SHEL.US): Golden Cross Above Zero Confirms the Rally, Oil Is the Swing Factor

The daily MACD on Shell (SHEL.US) printed a golden cross above the zero line on September 8, and short-term momentum is now in the bulls' favor. The stock closed up more than 2% to refresh its recent high. Turnover came to about USD 707 million, a moderate step up from the previous session and in line with recent active levels. DIF crossed above the DEA line, shifting short-term buying from tentative to aggressive. The 5-, 10-, 20- and 30-day moving averages are stacked in bullish order and fanning upward, giving the shares support at each level.

The engine of this rally is geopolitical, and the headlines keep feeding it. On September 8, Yemen's Houthi militants attacked Saudi energy facilities and Brent crude traded above USD 98 a barrel intraday, lifting oil and gas producers around the world, Shell included. The escalation deepened within the past few hours, when the US military sank an Iranian oil tanker in the Persian Gulf and Iran retaliated against US targets. Brent has since returned above USD 100 a barrel for the first time since late July. Goldman Sachs and other houses warn that further disruption to shipping in the Red Sea or the Strait of Hormuz could push crude toward USD 120, so the supply premium is unlikely to fade quickly. Company-level catalysts are piling up as well. Shell closed its acquisition of Canada's ARC Resources on September 2, expanding its output and resource footprint in the Montney shale. Morgan Stanley followed on September 3, upgrading the stock from Neutral to Overweight and lifting its target price from USD 81.6 to USD 101.3, citing resource sustainability and visible production growth through 2030.

This cross confirms momentum inside an uptrend rather than calling a bottom. It printed above the zero line, on top of a moving-average stack that was already pointing higher. How long the signal holds now depends on crude and on volume more than on the indicator itself. Volume ran modestly above the prior session's level, so the price-volume action is broadly healthy. The short-term gauges, however, are running hot. Price has punched through the upper Bollinger band, and RSI and CCI sit in overbought territory, so an intraday pullback after such a sharp run is a live risk. Watch two things today: whether Brent holds above USD 100, and whether energy can run its own race while stock-index futures slip and Treasury yields climb.

Geopolitical risk anchors the fundamental case and the Morgan Stanley upgrade anchors the positioning case, so the near-term bias stays constructive. The rally, though, rests on a narrow base of oil prices and event headlines. If a de-escalation signal appears, crude will fall fast and the stock will follow it down. Oil that stays expensive creates its own problem, reviving inflation and rate-hike worries that can cap broad-market valuations. Add overbought gauges and a price stretched far from its moving averages, and profit-taking pressure is building. The 10-day moving average is the level that matters: if the stock slips back below it while volume fades, the golden cross loses its validity.

This content is for informational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security or capital markets product. It has been prepared without regard to your individual investment objectives, financial situation, or particular needs. Investing involves risk, including the possible loss of principal; past performance is not indicative of future results. Longbridge and its affiliates accept no liability for any loss arising from reliance on this material.