Commodity Stocks: Buying opportunity

Commodity related stocks such as metal and oil have been under pressure recently. With crude oil falling out of bed it's not a surprise to see oil stocks getting hit as well. If you've been reading my posts over the past few days you are aware that I've been commenting on how some oil stocks have stopped going down in the face of falling crude oil prices. I've been buying them this past week and making some money for quick day trades but now I think we may see a more longer term move up in some of these stocks.

Above is a 1 1/2 year daily chart of the $crx index which represents various commodity related stocks such as metal,steel and oil stocks. You can see clearly that the long term trend in these commodity stocks are up so buying a pullback is always a consideration providing you have another reason to buy them. Last week the index pulled back to what I consider a support zone and appears to have held. Notice in the lower panel the stochastics indicator. This oscillator does a pretty good job at identifying significant buying opportunities. Notice the stochastics have just crossed to the upside confirming the buy signal. I'm looking for the index to at least test the most recent swing high which is 630.

Some of the commodity related stocks I like are the stocks found in the $XOI index. The Drillers ($OSX) seem to be weaker so I'll leave them alone but the $XOI stocks have been acting well. These are the stocks that Ive been day trading because they have stopped going down with crude oil. Stocks such as CVX, TSO, XOM and HES to name a few. Even some of the metal stocks such as RGLD and PAAS might be a buy as well.

Keep in mind some of these stocks will be reporting earnings so take that into consideration if you decide to get involved. There are many commodity related metal and oil stocks to chose from. I couldn't possibly list them all here so do some research and look for the stocks that are in good trends. The point of this post is not to recommend any particular stock, but to alert you to the possibility of a buying opportunity in commodity related stocks.