Valero (VLO)

Question: What are your thoughts on VLO here? Company has been reporting good earnings of late and chart starting to look interesting. Thanks Steve

Valero Energy (VLO) has a bullish setup overall but could form a bearish engulfing candlestick pattern this week on a close today's below last week's opening price at 184.55. That said, the stock has plenty of support.

Key supports:

• Weekly upside gap from early January from 177 to 166. The rising 13- and 26-week moving averages (WMAs) near 175 and 165, respectively, coincide with the gap, reinforcing it as potential support.

• Chart levels and rising 40-WMA from 160 to 155.

VLO attempted to break out and confirm an April 2024 into January 2026 basing pattern with upside potential into the 250s-260s, but has stalled at 194, which is the 61.8% extension of the 2020-2024 rally projected from the 2025 low.

Bottom line: If VLO can defend supports, especially the first zone from 177 to 166, we would remain confident in the basing pattern and the potential for future upside.

VLO has provided leadership vs. the SPX from late 2024 but needs a breakout above the rising 200-WMA to confirm a base and the potential for more enduring leadership.

Chart 1: Valero Energy (VLO) (top) and relative to the S&P 500 (bottom)