Sunday, January 04, 2009

Why I am Watching The Oil Stocks



Since July 2008 Crude Oil has been trending lower along with the oil stocks. Both markets were pretty much in sync with each other making lows and highs at the same time until last week.

You'll notice that crude oil (lower panel) made a new swing low but the OSX index (top panel) did not. This is known as bullish divergence and suggests that we may see a rally in some of the oil related stocks. The fact that these oil stocks couldn't make a new low last week in the face of falling crude oil prices may be a clue that the oil stocks are done going down on a short-term basis.

4 comments:

Anonymous said...

Are you watching or buying in the oil sector now ? If not , what price would you need to see oil go to prior to going long ?

Thanks
Mj

Kevin said...

I'm watching the oils but I haven't taken a position yet... I'm invovled in a few other trades right now so mind is focused on those positions.

Anonymous said...

I just went long USO (30.08 ) and some energy stocks . This will be a very short term long trade , which I hope to re-enter next week .

Dippa777 said...

I'm in at $60 on USO. Ouch.. I know. Is dollar downing at this point sensible. Should I buy at $30 and if it drops to $25 or lower keep buying another 100s?

Thx, DjD

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