Friday, June 27, 2008

There Has To Be Something Worth Buying

As the tittle of this post says, there has to be something worth buying and indeed there is. Overall I'm still bearish on the stock market but there are some pockets of strength that are worth keeping an eye on.

The groups that might be worth buying are the ones that are commodity related. Anything that has to do with gold, silver, steel and especially oil might be an excellent group of stocks to focus on as potential longs.

Above is a weekly chart of the XOI index and in the lower pane is the %R oscillator which is very similar to the stochastics indicator. You'll notice over the last 3 years whenever %R reached an oversold condition it usually coincided with excellent buying opportunities 87% of the time. Right now %R is at such a level which is why I am writing this post.

At the moment I DO NOT have any entry signals to buy in any of the commodity related groups (except for XAU and HUI) but I did want to post the above chart so you can see what I am looking at BEFORE the move happens. I'll keep you all posted if I do anything.

One more thing, some of the other groups I am watching are STQ, XAU, OSX and XNG.

1 comment:

Gary said...

Of course I have no idea if the oil stocks are going to bounce. I would tend to be careful here as the oil stocks have not confirmed oils rise (usually not a good sign).

Energy is eventually going to succumb to the bear just like everything else.

There's just no way that energy demand remains high as the global recession deepens.

Oil itself is currently in one of the largest parabolic runs of this entire bull market. That alone makes me nervous to jump on the band wagon.

To top it off everyone and their cousin fromCramer to Jim Puplava it now touting energy as the safe haven. When I see that kind of irrational exuberance I tend to want to fade it not jump on board with the rest of the sheep.

Now the gold stocks on the other hand are confirming golds move and absolutely no one is touting gold.


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