Should I buy?
Every evening I scan through charts within sectors of the market. I write down stocks on a list for the next day that are “setting up” and/or could be potential trades.
Recently, I’ve found that Oil stocks have been coming up on my list.
Here is a chart of the broad ASX300 Energy sector:
As you can see the index has been going sideways since late April.
It now appears to have broken out of this range (on heavy volume).
Stocks in sector that I am watching:
(Click on code for chart)
These are the best ones I can find.
After the strong run up in Oil stocks between Jan-Apr 16- they based for 3 months.
The big caps (AWE, ORG, OSH, STO, WPL) look like they could breakout soon.
If we look at Spot Oil you will see it’s in a downtrend.
In my experience stocks generally start to move before the spot price of a commodity moves.
I’m not too worried that spot price is currently in downtrend, unless we get prices below $44 and the 200day MA.
Let’s look at the Positives & Negatives for a move in Oil stocks:
- Oil stocks are holding up and looking to breakout (when Spot Oil is in a downtrend)
- There’s still a lot of bearishness around Oil, we haven’t seen the hysteria from investors that Gold has produced.
- The broader ASX300 Energy chart looks to have broken out of its 3 month range on heavy volume.
- Spot Oil is in a downtrend- this could hold Oil stocks down.
- The recovery in Oil stocks has been “V” shaped. There will be quite a lot of people who brought Oil stocks a lot higher & will want to sell on moves higher.
- I always like to look at both positives and negatives. It gives you a less biased view.
- There’s always doubt in my mind & whenever I am not sure about a trading idea I always say “just follow price”.
- So if Oil stocks can breakout and sustain those breakouts, I will “just follow price” and trade them.
What do you think? Are there any other Oil stocks you know that look good?