The Light Crude Continuous Contract fell from $67.70 a barrel on Monday to $62.75 on Thursday, and closed at $65.79 on Friday. Consequently, oil stocks followed the sharp move in oil prices last week.
The first chart is an OIH (basket of oil stocks) daily chart, which suggests a consolidation or correction over the next few weeks. The Price-by-Volume bar (on left side of chart) indicates OIH may trade between 111 and 114 short-term. There's also resistance around 115, i.e. the 10 & 20 day MAs. There's further resistance at 117.88, which is the current Parabolic SAR sell signal (red dots). However, if oil tests $70 a barrel, then the high at 119.30 is another barrier. Oil is less than $5 a barrel below $70. So, OIH may rise and fall quickly.
OIH major support is at the (rising) 50 day MA, currently just over 108. However, if OIH closes below the 50 day MA, then next major support is around 105, i.e. the longer Price-by-Volume bar. Around 105 may be the bottom of the consolidation zone, while a correction may result somewhere in the 90s or 80s. The short-term price of oil is largely dependent on the rate of global economic growth, reflected in monthly economic data, and supply disruptions, including geopolitical events and hurricanes in the Gulf.
The second chart is an SPX (S&P 500) same period daily chart. SPX lead OIH higher and then lower recently. If OIH continues to lag SPX, then OIH will rise next week, perhaps to the Parabolic SAR sell signal, trade around the 10 & 20 day MAs, and then fall to a new recent low, e.g. 105. SPX created a bullish doji at the 50 day MA. However, a volatile trading range may continue next week, perhaps between 1,200 and 1,235.
Next week is a light economic data week: Mon: None, Tue: Existing Home Sales, Wed: Durable Goods Orders and New Home Sales, Thu: Unemployment Claims, and Fri: Revised Michigan Consumer Sentiment. The weekly oil inventory report is Wed at 10:30 AM ET. There are several other excellent trading opportunities next week, where large gains can be made quickly. "Chance favors the prepared mind"-Louis Pasteur.
Charts available at PeakTrader.com Forum Index.
Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.
Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time. This methodology has resulted in excellent returns with low risk over the past four years.
What is the value of a good habit? Think of... Read More
For better or worse, most option trading investors purchase stocks... Read More
Find out everything you need to know about buy to... Read More
In many respects, Singapore is the Switzerland of Asia.Begun in... Read More
They're real, but few survive. High risk investing is dangerous... Read More
JewelryThe advantages are:? Gold Jewelry is the easiest of the... Read More
As a precious metals investor, you may heard much about... Read More
In the simplest of terms, Arbitrage means to exploit price... Read More
Over the course of the past two months, readers have... Read More
If you are new to investing online, don't put your... Read More
If you're like many Americans over the age of 55,... Read More
When raising capital for a business venture, warrants are a... Read More
"Risk comes from not knowing what you're doing!" Warren Buffett... Read More
What really controls the economy? Forget interest rates, forget deficits,... Read More
Purpose: Expose Opportunities for Smart InvestorsThe move by China's central... Read More
Many people buy annuities according to their agent's recommendations. However,... Read More
The stock market fell sharply Thu and Fri before and... Read More
The U.S. economic data reported this week showed strong output... Read More
The following lists of questions are suggested questions to ask... Read More
We've helped a number of clients develop business plans and... Read More
Mutual fund managers use fake fund names to part you... Read More
In part 1 of this article I started to look... Read More
Every year I go to the Money Show in Orlando,... Read More
CATCHING A FALLING KNIFEOne of the most common mistakes made... Read More
If you are interested in stock investing and the stock... Read More
To create momentum in your options trading you need to... Read More
While it is rather rare that value gurus sell stocks... Read More
I'm sitting here at my computer desk with a cup... Read More
How do you make your investment decisions and where do... Read More
You have rowed a boat at some time haven't you?... Read More
First of all, I want to give everyone the disclaimer... Read More
Everyone knows that the Holy Grail of investing and trading... Read More
I submit that the successful day trader would profit well... Read More
As a precious metals investor, you may heard much about... Read More
While a U.S. Representative to the Asian Development Bank Executive... Read More
Most People just don't understand the power of using their... Read More
There are many different ways to invest in world markets:... Read More
When you invest, it simply means that you are putting... Read More
I said last week that money doesn't generally buy happiness,... Read More
For many investors, and even some tax professionals, sorting through... Read More
Here are some useful tips on investing. When you make... Read More
Have you ever noticed how some words in the English... Read More
In April, the U.S. Mint revealed plans to strike in... Read More
In this "special report", I want to pose a few... Read More
If you're like many Americans over the age of 55,... Read More
The American Jobs Creation Act of 2004 imposed strict new... Read More
This article was originally featured in Daryl Guppy's 'Tutorials in... Read More
Investments are scary for some people, especially those who have... Read More
The practice of economy, directed toward a retirement investment plan... Read More
In 1519, Hernando Cortes, beached on the shores of unexplored... Read More
Ask this question to 100 people and you will receive... Read More
"To drift is to be in hell, to be in... Read More
An option is a traded security that is a derivative... Read More
If you want to retire rich, start saving investing early.... Read More
It use to be said that once a company was... Read More
When thinking about the investors business daily responsibilities in today’s... Read More
The most basic aspect of trading is learning to differentiate... Read More
Non-indexed mutual funds try to keep it secret that actively... Read More
To understand stock options, we need to look at Webster’s... Read More
Yes, it's the time we've all been waiting for?tax season!... Read More
Are you as good an investor as you think? Do... Read More
For instance, if the market moves up in the first... Read More
One of the most common mistakes made by inexperienced investors... Read More
No matter how much money you make, it pays to... Read More
First of all, I want to give everyone the disclaimer... Read More
For investors only... and for speculators who need to invest... Read More
Investing |