Oil Stocks

Oil stocks continue to move higher although it was mixed today. Some of the big gainers at the open were SLB and DO.

The February contract for crude oil expired today which means we should all be watching the march contract because that's where all the open interest is. The symbol is CLH07.

If you look above you will see a daily chart of XLE.. Notice recently there appears to be a 3 1/2 month cycle of lows moving though the oil market. It seems like oil stocks have turned the corner confirming the cyclical low.

Keep in mind there is also a seasonal bias this time of year for oil stocks to rally which I commented about yesterday.

I've been bullish on oil stocks for the past 8 days and have been doing quite well buying them for day trades and catching the over night gaps. I've been writing about these stocks every day posting my observations and it seems I've been correct.. At least for now. I think a longer term move is developing and I am positioning myself for it.

In the lower panel is a ratio line of XLE compared to the S&P. If the line is rising that means oil stocks are outperforming the S&P, if the line is falling, oil stocks are under performing the S&P. Notice the ratio line has just started to move higher confirming that money is starting to move back into oil stocks. Let's hope it continues.