Energy, Energy Service, Natural Gas & Oil Sectors: Crude Oil futures TA

» JenL_2 - Crude Oil futures TA

Here's some excerpts on energy stocks from a TA article in 8/8 Barron's Online:

Markets Still Move in Fits and Starts

By Michael Kahn

After breaking above their declining trend lines last week, most major U.S. market indexes have either reversed or cancelled out those bullish moves.

That has created trading ranges which, given the overall down trend since May, could turn out to be bearish indicators.

As we've been pointing out for some time, the markets don't seem able to sustain moves in either direction. But with sentiment still bordering on excessive optimism, it seems likely that declining trends will reassert themselves.

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Energy stocks, however, have not done well in recent months, and pundits are quick to point towards falling energy prices as one of the reasons. Last week, New York Mercantile Exchange Crude Oil futures made a short-term breakout move to the upside, and this is significant because only last month they failed to hold on to an intermediate-term break lower (see chart 5).

Chart 5
<img src="/files/mysites/jen2/ta58-8-01.gif" width=449 height=310>

These fakeout moves, sometimes called bear traps, shake out weak players and set the stage for moves in the opposite direction. Should this play out, it could mean $31 oil prices in the near future with an argument possible for a return to last year's peak of $37 per barrel.

With all of these head fakes and failures to follow through, investors still have plenty of time to formulate a game plan without feeling the pressure to buy into any hyped rally. The nimble have a nice assortment of stocks on which to nibble, while the rest of us wait for the market to get itself together again. But for now, the trend for the major averages remains anything but up.

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.....Jen

-- posted by JenL_2