Energy is the most beaten down sector. The SCTR is hanging out at 3.8 and 75 is a good score. It couldn't get uglier? Who knows, but there are a ton of positive divergences setting up on the energy related charts right now. Diamondback Energy (FANG) is coiling for a move here and it looks tempting for bottom fishers. If you are a breakout buyer, this won't be your chart.
First of all, price is trying to hold above a long-term support resistance level. Price has to hold $85 so the risk is tightly defined. I am watching closely for the Full Stochastics to turn up from a higher low. Commodity related stocks can do real well, just surging above the 10 WMA. The PPO is turning up as well with a higher low, so I like these divergences where the Full Sto and the PPO are making higher lows. If the big trend down on the PPO breaks, I think this stock can really start to move.
This is not for the timid but with the risk line just below this weeks low, it looks very interesting here.
I have posted a Commodities Countdown video recording 2017-08-31 marking this weeks breakout in Gold and a large discussion on the energy trade.
Commodities Countdown Video With Greg Schnell 2017-08-31 from StockCharts.com on Vimeo.
Enjoy the long weekend!
Good trading,
Greg Schnell, CMT, MFTA
