| Technical Analysis USO OIH $OOG UPL ADM PEIX CRS $SILVER |
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| Monday, January 15, 2007 |
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Energy & Silver Stocks & Indexes Update - USO, OIH, $OOG, Silver, UPL, ADM, PEIX, & CRS Charts
On this update, I will focus on the Energy Sector.
Please click on the trading journal link provided for you below, in order to print out your trading journal. This way, you can update your trading journal as you read and listen to this update. Using this is a great way to learn how to trade with a trading journal! This is the first step that you need to follow on your path to achieving "sudden profits." This is what is called doing your homework or due diligence on an equity before you enter a trade. You can also use this sheet in the live trading chat room and when you receive a buy alert from John. Remember that a good trader always plans their trades, and so should you, because a failure to plan is a plan for failure!
http://www.trending123.com/short-term-trades/trading_journal.htm
United States Oil fund - (USO) - Monthly and Daily Charts - Possible reaction low being placed- Not Optionable
USO is a stock that is similar to an ETF and it tracks the United States Oil Sector. USO is similar to an ETF. The monthly chart illustrates that it is currently in an ABC pull back to the 8 year uptrend line. The uptrend line remains intact. I believe reaction lows are being put in at this time for USO. Now, I want you to keep in mind that Oil, the commodity, and the energy stocks have diverged. The energy stocks are not following the price of the commodity, and they have not for a long time, which is why I prefer the stocks. When Oil starts out performing the stocks then we will have something to worry about, but until then, we be happy. As I mentioned earlier, I believe that a key reversal or turning point is in progress for USO. It looked at first like it was putting in a diamond bottom, while unleaded gas was actually in the expanding triangle bottom, but they are both in a diamond bottom. If you look at the daily chart, you can see that USO is putting in a reaction low on extremely heavy volume with bullish divergence in the RSI, which typically points to a low. As long as both the stocks and the commodity are not making new lows, then USO is fine, and we don't care how low the actual commodity goes.
Now let us discuss the weather, because, believe it or not, it plays an important part in the psyche of people trading the energy sector. I would like you to recall that during the summer last year, Oil prices were flying high and everyone ignored the fact that 11 hurricanes were approaching the US coast lines. People began to trade the weather in anticipation of these hurricanes appearing until they never arrived on our shores. Now I would like to flip this scenario around, and see how it relates to the energy sector right now. Could we not have gone to the other extreme in complacency right now? We could be playing out the following scenario at this time, which is the reverse scenario of last summer. Let us turn our focus to the global warming that is occurring on the east coast right now. Currently, the East coast is experiencing a warmer than average winter side this year. It doesn't seem to matter that California is freezing and that all their crops are dyeing. You better start to expect to pay higher prices for California's crop products. Never mind that Oklahoma, Kansas, and Colorado are having the worst winter in decades. Traders are experiencing the reverse type of complacency from that of last summer regarding Oil. They are forgetting that Oil prices are really low just because the East coast is warm. I just want to point out the 2 times where complacency was very high. The bulls were very complacent last summer when Oil was making new 52 week highs. Now the bears are very complacent about the fact that Oil is trading at it's 52 week lows. I think the bears are over dependent on Global warming as the driver of continued low prices in Oil. Now let us remember that the stocks are not making new lows in tandem with Oil. This action is BULLISH. The energy equities are beginning to outperform the price of Oil. I hold a bullish long term view on the future price performance of Oil and the Energy Sector.
OIL Service Holders - (OIH) - Weekly Chart - Possible reaction low being placed- Optionable
The weekly chart of the OIH illustrates that it has been trading in a wave 3 to wave 4 pullback, which contains an ABC correction, since May of last year. Last week the OIH got hammered on heavy volume. However, it did hold the long term uptrend line and performed quite well despite the carnage that Crude Oil experienced last week. Furthermore, the OIH may be putting a an inverted head and shoulders pattern on the weekly chart. The OIH did not make new swing lows even thought Crude did. This is bullish action. However, the lows in the OIH still need confirmation.
ISE OIL and Gas services Index - ($OOG) - Weekly Chart - Possible reaction low being placed- Optionable
The weekly chart of the $OOG illustrates that it has been trading in a wave 3 to wave 4 pullback, which contains an ABC correction, since May of last year. The $OOG performed quite well despite the carnage that Crude Oil experienced last week. The $OOG actually put in a Doji candlestick this week, and it may signify the start of a new trend. However, this Doji needs confirmation. You can see that the $OOG may be testing the lows from last year and putting in some type of irregular flat. Furthermore, it may also be putting a an inverted head and shoulders pattern on the weekly chart.
Silver- ($SILVER) - Continuous Contract - Daily Chart
Silver, like Oil, has also been trading in a wave 3 to wave 4 pullback, which contains an ABC correction, since May of last year. Silver is now open and trading, it was last at $13.035. If you look at the chart, it is very close to breaking it's short term downtrend line. Once it breaks the downtrend line, Silver will continue up to wave 5. This breakout looks very close to happening as the Stochastics are reversing to the upside. I believe Silver will outperform Gold in this last leg up.
Ultra Petroleum Corp. - (UPL) - Monthly Chart - Independent Oil & Gas - Optionable
UPL is a momentum Oil play, it has a P/E of 34.52. It is a high beta / fast moving oil stock. It a favorite momentum play with traders who trade in this sector. The Monthly chart of UPL illustrates that it has been trading in wave 3 to wave 4 correction for the last year. You can see that it has traded all the way to it's 34 EMA. The 34 EMA typically acts as a magnet for prices to move towards. UPL has held this moving average, and buying volume is beginning to creep back into the stock. UPL has been trading in a rectangle / tight trading range for the last 4 months. It has not moved and nothing has changed since the last update. Please note that despite the Carnage in Crude Oil this month UPL is up slightly for the month of January. UPL is a medium risk investor trade, meaning that it is meant to be held for 3 to 6 months or until price target is reached at $75.00.
Archer Daniels Midland CO. - (ADM )- Weekly Chart - Optionable
ADM is a current portfolio stock and it is an ethanol play.This is my top Ethanol pick. I want to discuss the daily chart first before I move on to the weekly chart. If you look at the price action in 2005, you will see that $23.46 and $19.39 was a sub wave of the primary waves 1 and 2. Then $46.36 is the beginning of the wave 3 to wave to wave 4 correction. Within that 3rd wave down, it ABC'd down to current prices. Let me ask you this. What is the difference in the ADM daily chart from the charts of Zoll and OMG at original entry. I think the technical's for ADM look great. I like ADM, I think it is going to go higher. Indicators and oscillators are still bearish and ADM remains oversold. My price target remains $46.00 which is the next resistance level.
Pacific Ethanol ethanol, Inc. (PEIX) - Monthly Chart - Optionable
PEIX is a current portfolio stock and it is also an ethanol play. This is my least favored Ethanol play strictly because the majority of my subscribers would prefer to play this lower quality equity over ADM, which has better fundamentals. Subscribers would prefer to play a lower priced equity over a higher priced one. This logic is foolish. A gain of 10% is a gain of 10% regardless of the price of the equity. Now, don't misunderstand me, I am not bashing PEIX I am only giving it an honorable mention.
Carpenter Tech Corp.- (CRS) - Weekly Chart - Optionable
As you can see by looking at the weekly chart, CRS is in a bullish symmetrical triangle pattern. As with many of our energy plays it is completing it's wave 3 to 4 pullback, and on the verge of breaking it's down trend line. If you look at the volume you will see that there has been steady volume for the last month. CRS has been holding steady at it's 50 day EMA. This accumulation has caused a bullish Aroon cross in November. Indicators and oscillators appear to be oversold and in the process of marking a bottom. CRS closed this week up 7.32% at 104.41.
Edited by Daisy
Andrea Victoria Friend aka Daisy
Editorial Assistant for Trending123.com
daisy@trending123.com
USO
USO
OIH WEEKLY (UPTREND LINE HELD AND DID NOT MAKE NEW LOWS WITH THE COMMODITY) ALL THAT SPELLS BULLISH
$OOG WEEKLY
SILVER
UPL--AGAIN IT TOPPED 1 YEAR AGO AND HAS BEEN IN A SIDEWAYS CORRECTION ON THE MONTHLY
ADM--VOICE UPDATE WILL EXPLAIN FURTHER SETUP DETAILS
PEIX--VOICE UPDATE WILL EXPLAIN FURTHER SETUP DETAILS
CRS--VOICE UPDATE WILL EXPLAIN FURTHER SETUP DETAILS
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