| Technical Analysis OIL OIH Before After Charts |
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| Sunday, January 7, 2007 |
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Weekend Update - Technical Analysis of $WTIC, VLO, OIH, OXY, & ECA
On this update, I would like to take a walk down memory lane. I would like to review stuff from the summer. Out of all the updates, I would like you to pay the most attention to this update. Although, I do think I came out with some pretty cool video updates. Ok, so let's start our walk down memory lane. Let us go back to July 2006.
What was happening in July? If you recall, during the summer, our country was preparing for eleven hurricanes in the gulf, everyone's house in the south was going to have wheels, and the pundits are panicking the public with calls of $100.00 a barrel for crude oil ($WTIC). All the talking heads on TV could do was talk about the high price of Crude Oil at every single opportunity . Everyone was complaining about the high price of oil. (On top of that, we are taking holidays trips to Mars!) Throughout July, I kept reiterating that the pundits were crazy for saying that crude was going to hit $100.00. This is because I knew that Oil was in a rising wedge pattern and the MACD was showing negative divergence.
Introduction to what was going on this summer in the Energy Sector
A rising wedge is the most heinous of all heinous patterns. This is because rising wedges always retrace down to the base of their wedge. This pattern was not a good sign for Oil prices going forward. It was a sign of an interim top in the commodity. In addition, the energy stocks were already to start rolling over and were beginning to under perform the price of the commodity. Again, not good. Due to the rising wedge appearing in crude Oil, and the negative divergence present in the indicators and oscillators, I began to suggest that we start to short oil stocks and the energy sector. This news went over like a fart in church. Many of my long term Oil bull subscribers took my negative call on Oil and the energy sector personally, but it wasn't an attack on them or the energy sector at all, it was just a fact based on technical analysis. When $WTIC made a new all time high at $75.78 on July 7th 2006 it promptly made an outside bearish reversal as soon as the high was hit. In fact, the OIH and stocks in the energy sector began to sell of sharply 3 days prior to the highs in Oil. Keep in mind that the summer's trading range for the OIH was between $150.00 to $130.00. The OIH went nowhere all summer. It was range bound. It was very easy to get bearish on the OIH around $130.00 and Bullish around $150.00. Hence, the reason why I did so many updates reminding subscribers that heavy resistance was present at $148.00- $152.00. Furthermore, the OIH had a bullish Aroon cross at the same time, and it was time to expect a counter trend pullback to the uptrend line. Now, I am going to walk you through the counter trend pullback that occurred in the OIH during the summer time , which is when we went bearish on crude oil and what happened.
Now we are still discussing oil. When I was bashing oil, I was not just doing chart updates, I was also taking photos of the price oil dropping at the Conoco Phillips and VLO gas stations! Gas prices were falling at the pump. I knew that crude oil was in a big pump and dump. I knew Oil was going to go into a huge decline over the next few months. However, at the time, I did not know that Oil was going to tank so fast, and that we could flip around and go long again so quickly. What I did know, was that the minute the OIH went into a bullish trend reversal on the weekly that the next support was at $130.00. What I want to do now, is walk you through stocks that I pointed out that are still going lower to hit their longer term trend lines. The great thing about technical analysis is that it can actually gauge that stocks are going to go lower over the short to intermediate term without breaking their long term uptrend lines. Why do traders become crack heads when a trend goes bullish or bearish on the weekly? According to Dr. Janice, this is due to our inability to think counter intuitively. Now let's move on and look at the charts of Crude OIL and the OIH and some of the energy stocks that we were trading during the summer.
Oil - Light Crude - Continuous Contract Index - ($WTIC) - Before and After Charts Summer 2006
- July 7th 2006 - Daily $WTIC chart you can see the following:
- hits resistance at the ascending triangle breakout line
- outside bearish reversal candle after making a 52 week high at $75.78
- early warning signs bearish/ negative divergence in the RSI and PPO
- bear flags down in the month of July on the daily chart
- bullish Aroon cross occurs at the end of June/ beginning of July - when a cross is marked in the Aroon it calls for a short term counter trend pullback - in this case down
- weekly July chart is in a bearish rising wedge pattern
- September 15th 2006 - Weekly $WTIC chart you can see the following:
- is in an ABC correction down towards the long term uptrend line
- Everyone know oil is pulling back - time for a counter trend rally
- bearish/ negative divergence in the RSI and PPO and stochastics not oversold yet
- Bearish Trend
- Bearish Aroon cross occurs at the beginning of August - when a cross is marked in the Aroon it calls for a short term counter trend pullback- in this case up
Valero Energy Corp. - (VLO)- Daily Charts - Energy Sector - Optionable
- Daily chart August 11, 2006 you can see the following
- Trade Type = I recommend VLO as a short
- Pattern = Bearish Rising Wedge break down
- Direction = Down
- Volume = increasing as the price breaks below the rising wedge uptrend line
- Wave = In an ABC down in a wave 3 to wave 4 correction down to the long term uptrend line,
- Moving Averages = Triple moving average crossover downwards beginning to occur
- Indicators and Oscillators = Aroon in Bullish trend with RSI, WM%, PPO & Stochastics rolling over
- Divergence = bearish divergence in the RSI, PPO and Stochastics
- Price Target = Approximately $48.00
- Daily Chart September 15th, 2006
- Pattern = Bearish Rising Wedge Breakdown with ABC waterfall down to the $48.00 area
- Direction = Bottoming with reaction lows
- Volume = increasing from August into September as the price puts in reaction lows
- Wave = In an ABC correction down within a wave 3 to wave 4 pullback
- Moving Averages = Triple moving average crossover occurs in August, price trade sharply below the averages
- Indicators and Oscillators = Extremely oversold, which is often when a stock keeps making new lows and brings the biggest drops in price
- Divergence = none - oversold
- Price Target = short price target achieved at around $48.00
Oil Services Holders ETF - (OIH)- Before and After Charts - Energy Sector
Daily OIH chart July 7th, 2006 you can see the following
· Trade Type = short
· Pattern = Head and Shoulder Top with dual bearish rising wedges, OIH breaks down out of the 2nd Rising Wedge
· Direction = Down
· Volume = increasing / expanding on the breakdown as the price breaks below the 2nd rising wedge's uptrend line
· Wave = in a wave 3 to wave 4 correction down to the long term uptrend line
· Moving Averages = Triple moving averages are converging and beginning to rollover
· Indicators and Oscillators = Aroon in Bullish trend with RSI, WM%, PPO & Stochastics rolling over
· Divergence = bearish divergence present in the RSI, and PPO with Toppy Stochastics
· Price Target = Approximately $130.00 or lower
· Notes= when the Aroon goes bullish as it here, you can usually expect a counter trend rally to test the breakdown line, use this time to sell into strength
Weekly OIH Chart July 17th, 2006
· Pattern = Head and Shoulder Top with dual bear flags, OIH breaks below second bear flag
· Direction = Down
· Volume = Selling pressure increasing along with price keeps as it keeps going lower
· Wave = In an ABC correction down within a wave 3 to wave 4 pullback
· Moving Averages = stalling and beginning to rollover, price trading below 13 & 34 EMA
· Indicators and Oscillators = still in a bullish trend working a 123 bearish trend reversal
· Divergence = Bearish divergence present in the RSI, WM%, PPO and Stochastics
· Price Target = still going down, not achieved yet
Weekly Chart OIH July 21st, 2006
· Pattern = Head and Shoulder Top and trading at the neckline
· Direction = Down
· Volume = heavy selling increasing / expanding with new lows in price
· Wave = In an ABC correction down within a wave 3 to wave 4 pullback
· Moving Averages = stalling and beginning to rollover, price trading below 13 & 34 EMA
· Indicators and Oscillators = Aroon has a bearish trend reversal, the RSI, WM%, PPO and stochastics bearish and still pointing down
· Divergence = none - no bullish divergence
· Price Target = still going down, not achieved yet
· Notes = when the Aroon goes bearish as it here, you can usually expect a counter trend rally to test the bear flag breakdown line, use this time to sell into strength
Weekly Chart OIH July 28th, 2006
· Pattern = Head and Shoulder Top and trading at the neckline, but time for counter trend rally
· Direction = short term up / counter trend bounce
· Volume = heavy volume buying
· Wave = In an ABC correction down within a wave 3 to wave 4 pullback
· Moving Averages = price holding the 50 EMA
· Indicators and Oscillators = Aroon has a bearish trend reversal, the RSI, WM%, PPO and stochastics bearish and still pointing down
· Divergence = none - no bullish divergence
· Price Target = still going down, not achieved yet
· Notes = when the Aroon goes bearish as it here, you can usually expect a counter trend rally to test the bear flag breakdown line, use this time to sell into strength , this is what you see on this chart.
Weekly Chart OIH August 1st, 2006
· Pattern = Head and Shoulder Top and trading at the neckline, but time for counter trend rally
· Direction = short term up / counter trend bounce
· Volume = heavy volume buying
· Wave = In an ABC correction down within a wave 3 to wave 4 pullback
· Moving Averages = price hits the 34 EMA and trades above the 13 EMA
· Indicators and Oscillators = Aroon has a bearish trend reversal, the RSI, WM%, PPO and stochastics bearish and still pointing down, but may be close to a bottom
· Divergence = none - no bullish divergence
· Price Target = close to a bottom / price reached at $129.00
· Notes = when the Aroon goes bearish as it here, you can usually expect a counter trend rally to test the bear flag breakdown line, use this time to sell into strength , this is what you see on this chart.
EnCana Corp. - ECA - Before and After Weekly Chart - Independent Oil & Gas
ECA trades with a P/E of 6.15 and presents itself as a good value and fundamental play. If this is what you are looking for, you may want to start building a position in this low P/E stock.
Weekly Chart ECA December 22nd 2006 & Daily Chart January 3rd 2007
· Pattern = Corrective Contracting symmetrical Triangle within Larger Bullish Ascending triangle pattern
· Direction = Counter Trend direction / Coiling within symmetrical triangle short term sideways to down
· Volume = increasing selling
· Wave = wave 3 to wave 4 pullback
· Moving Averages = moving averages are consolidating sideways, price trading below the 13, 34 & 50 EMA
· Indicators and Oscillators = all are in 123 bearish trend reversal
· Divergence = bearish divergence
· Price Target = around $42 at the uptrend line
· Notes = it is going to break the long term uptrend line, this drop is bullish.
· Now look at the January third and see where the price went. The stock did what is was supposed to do according to the patterns it is in. Note the bullish hammer off of the lows. Now on January 7th it is trading at $45ish. The EOG chart is just like the ECA chart.
Edited by Daisy
Andrea Victoria Friend aka Daisy
Editorial Assistant for Trending123.com
daisy@trending123.com
All these updates are from the summer just doing a walk down memory lane
OIL IN JULY
OIL IN JULY
OIL IN JULY
OIL IN SEPTEMBER
VLO IN AUGUST
VLO IN SEPTEMBER
OIH ON JULY 7TH
OIH ON JULY JULY 17TH
OIH ON JULY 21ST--THE DAY OF THE BEARISH TREND REVERSAL!! (RIGHT BEFORE A 20 POINT COUNTER TREND RALLY)
OIH
OIH
OXY (PRE-SPLIT
ECA--WEEKLY (SEE IMAGE ABOVE)
ECA CURRENTLY
EOG--WEEKLY
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