Valero Energy Under Pressure - What Could It Mean?

Valero Energy (VLO) has been under pressure for the past month, and has broken beneath key support at its 200-day EMA (50.17) and its prior (July) significant corrective low at 49.22.

Depending on the perspective we decide to take, the big-picture pattern developing in VLO represents one of two things. It is either a complex correction within a down-channel that projects to 44.80-44.30, or the breakdown from a huge 12- to 14-month top formation that projects a target zone in the vicintiy of 40.00-38.00.

Right now, my sense is that VLO is more vulnerable to the second, or top scenario, within a deeper, more damaging bearish period that reflects a challenging fundamental environment of abundant crude oil, oversupply of products, and sluggish demand.