My bullishness on Oil is no new trend, check out my post on USO when it was back in the mid $40s. And, after taking a few weeks to base out, the Oil sector is running once again. Let’s take a look at some charts.
Look a this chart of the tracking fund for various segments of the oil service industry (OIH), very nice. 1st highlight is yesterday’s close above the 200 day moving average - DMA - on nice accumulation volume. The fund also moved past its 50 DMA yesterday as well, and finally it closed at the highs of its day. Adding OIH at under $140 is a steal right now, and a $147.50 target price isn’t out of reach by any means. Downside protection, $136.50 should do. Note though this may be a longer hold than just a few weeks, as we need to see the 50 DMA start trending back upwards and re-cross over the 200.
The Energy Select Fund (XLE) just broke out of a short term channel to the upside, and now has $59 resistance clear in site. I think this momentum is enough to push the fund past $59 and up to $60 where the next resistance lies. I like an XLE position here with stops in the $57.50 area. What I want to see going forward now is stronger accumulation volume and the 50 DMA to start pulling back to the upside. The moving averages should play for good support if the fund decides to take a run over the next several months.
Last today because I could post up alot more is a chart of Holly Corp (HOC) which just this week broke out of its base. With this weekly chart you can see the latest base and breakout. But, as good as this chart looks, I would be catious with your position; the weekly volume isn’t looking to strong.Volume on breakouts like this need to be extremely noticeable and heavy accumulation worthy; this is not. Note though that HOC still has today to add volume to the overall week.
Regardless, I support taking a position under $57, with stops around $54.50. If you are patient though you may find yourself with an opportunity to pick up shares under $56.
Happy Hunting Always.
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