ChartWatchers

KEEPING AN EYE ON ENERGY

 | 

With the first week of the year out of the way; we have seen a rather sharp and violent sell-off in a number of asset classes including energy. Our interest is energy stocks: we think the sell-off has gotten a bit "overdone" to be sure as the oil service sector has dropped -7%; but as we know - markets can remain irrational far longer than we can stay solvent fighting them. But a buying opportunity is being created; however, it isn't in the oil service shares where we want to place our trading capital...it is in the integrated oil producers such as Anadarko Petroleum (APC); Conoco-Phillips (COP) Hess Corp (HES); Occidental Petroleum (OXY) and Valero Energy (VLO).

Our reasoning is technically oriented; the integrated oil vs oil service ratio has broken out to the upside through trenldine resistance, and has indeed found support recently at the 200-week moving average. Moreover, the 14-week stochastic has corrected an overbought condition, and nascently turning higher. Given this, we think that previous high resistance of mid-2002 and mid-2005 at 6.4 will be broken, with a move thereafter upwards of the 2001 high at 7.6.

$XOI:$OSX

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
Subscribe to ChartWatchers to be notified whenever a new post is added to this blog!
comments powered by Disqus