Oil Tanks: What Energy Stocks To Buy Right Now
The market was hit hard last week. The decline
occurred on decent volume and was a direct result of weak economic data.
Truth be told, similar data has been tepid for the past few weeks, but
the market decided last week was an appropriate time to react.
More important for us; the bears held 1332, which is now a
resistance area. But the bulls still have 1301 support and the 1250 zone
will be strong support as well. Additionally there is a soft patch of
support that exists around 1280.
The bulls also have a falling dollar and stable oil on their side.
I have mentioned on a few occasions that I believe
oil is in a position to rally as long as $100 holds. This potential rally
in commodities still appears likely considering that asset class is
emerging from a strong decline in May and the dollar appears likely to
hit new annual lows.
Oil currently trades near $98, but the day is far from over. We
have seen oil dip below $99 several times in the past week, only to come
right back to session highs by the close. Energy stocks, on the other
hand, are getting hammered today; Exxon (NYSE: XOM) Chevron (NYSE: CVX)
and Cameron (NYSE: CAM) are each down 1% and all part of an energy sector
decline. I think oil and oil related stocks will rally soon; despite the
near term weakness this morning.
The bears control short term trend - that much is clear - but I
don't think they can hold it much longer. The market has built too many
support zones along the ascent higher from 1050 the past few months.
Additionally, the energy market is stable and the dollar is poised to hit
new lows. The stability in commodities and the decline of the dollar
should provide the groundwork for a new rally.
The bears (after Tuesday) look strong, at least strong enough to
break support near 1301. Additionally, the Nasdaq and financials look
ready to head another 2.5% lower (at least), which would then take SPX
down by a similar amount. If that decline occurs, I think it will be
steep, and happen this week and we're ready for it. The video "Market
Review" goes over this topic in greater detail.
The TradeMaster portfolio is properly hedged to fend off a
large decline. But it stands equally ready to add new long positions on
appropriate market weakness. A second video "Stock
Recap" highlights setups, both bullish and bearish, that you should
consider this week. While I plan to take more long positions, the near
term direction will likely be lower.
