OIH: Seasonal Bias Is Bullish

As most of you know, I am becoming bullish on the oil stocks. I was looking at some of my charts and I noticed a bullish seasonal bias for this time of year.

Above we have a 7 year monthly chart of the OIH. OIH is the ETF for the oil drillers (OSX). It would be nice if we had 30 years of data to work with, but 7 years for the OIH is all we have.

I noticed that there is a bullish seasonal bias for the OIH to rally from December into April. The red lines you see on the above chart show where the OIH was trading on the first trading day of December and the last trading day of April. If you had bought and sold at these points in time, you would have been profitable in 6 out of the last 7 years. In other words, the last trading day of April tends to be higher than the first trading day of December.

When we look at where the OIH is trading now, we see that we are below the first trading day of December. So if history repeats, there is an 85% chance that the OIH will be higher in April than where it was trading on December 1st.

Again, this is limited data... We need at least 20 or 30 years worth of price data to determine if there really is a bullish seasonal bias for this time of year, but I just wanted to share this observation with all of you.. We'll see what happens.