Crude oil is again diverging from oil stocks, ETFs today. Crude up $1 and yet XLE, OIH unchanged to slightly down.
Crude Oil
Started by
Tal
, Jan 26 2007 01:03 PM
3 replies to this topic
#1
Posted 26 January 2007 - 01:03 PM
#2
Posted 26 January 2007 - 02:51 PM
the stocks never sold off like oik and are short term overbought, i would look at the recent commodity lows as a positive divergence since none of the energy indices made new lows. another point to make is that a majority of revenues for service stocks and e&p's come from nat gas not oil. even the integrateds and oil sands stocks that should have gone down with crude didn't. I am not interested in shorting these stocks but rather buying on dips.
#3
Posted 26 January 2007 - 04:48 PM
For the stocks to take a breather would be no surprise -- it's been some serious relative strength since oil topped last July.
Shazzam -- good point about Natural Gas. It's been holding up quite well all in all, given the decline in oil.
Whether or we've seen the low in oil for this winter, I think the long term picture for both oil and NG is still bullish as heck. Seems to me the energy stocks are signalling this too.
Best,
Doug
#4
Posted 27 January 2007 - 01:59 PM
Good points.
As always, your outlook depends on your time frame.
My time frame for all my trades are very short term ranging from 1 day to a week or two at max.
The relative strength / weakness that I've observed specifically between Crude Oil and XLE / OIH has been extremely profitable for my VST time frame.