Thursday, March 22, 2007

Oil and Oil Stocks Continue Showing Strength

Today crude oil and oil stocks had large moves to the upside. The May contract for crude oil was up over 2 dollars closing at 61.88

The oil stocks I have long are having significant rallies with increasing volume as some of these stocks are breaking out.

Notice in the above chart of $XNG (nat gas stocks) the index is at resistance after having a large 4 day move. We may see some profit taking here, but I feel in the days to come the index will breakout.

If you look at the chart of USO (crude oil) it appears a reverse head and shoulders bottom is being formed with an upside target of 61.

I've been bullish on crude oil since mid January due to seasonality and cyclical patterns. I think prices should continue to trend higher into May.

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