Customer Service 1 (888) 261-2693
Advanced Search

The Next Big Trade in Energy

By Jeff Clark
Thursday, March 26, 2009

If you liked the action in the oil stocks over the past three weeks, then you're going to love what's coming next.
 
We turned bullish on oil earlier this month, and the sector has gone nearly straight up since then. The rally is now getting a bit long in the tooth. It's not over… But the risk of buying into the oil sector is not worth the potential reward.
 
Here's an updated look at my favorite oil stock indicator...
 
 
 
The bullish percent index is a momentum indicator. It illustrates the percentage of oil stocks trading with bullish chart patterns. The chart triggers a "buy" signal when it drops below 10. It triggers a "sell" signal when it rallies above 70.
 
We don't have a sell signal from this indicator yet. But stocks have rallied so far off the bottom, there's probably more downside risk than there is upside reward. So only short-term traders should venture into the oil patch.
 
Fortunately for everyone else, another sector is ready to make a move. Coal stocks have had a wild ride over the past year. After peaking near 750 last July, the Dow Jones Coal Index dropped to a low near 110. Since then, it has waffled back and forth between about 130 on the downside and 200 on the upside. Take a look...
 
 
 
The index itself is consolidating, and it'll take a move above 200 to spark a bullish uptrend. Several of the individual stocks that make up the index broke out to the upside last week. So the odds are high the index will break out as well.
 
We're still bullish on oil stocks, and on just about everything else in the energy sector. The run in the coal stocks, though, is just getting started. From a risk/reward perspective, coal stocks are the next place to be.
 
Best regards and good trading,
 
Jeff Clark




In The Daily Crux
Market Notes
Stocks in biggest monthly rally since 1987... S&P 500 over 20% off of its lows this month.
 
U.S. dollar down 6% this month after hitting three-year highs.
 
Copper fund JJC up 28% this year... you have no choice but to be bullish.
 
Earnings today... Accenture, Best Buy, ConAgra Foods, GameStop, Scholastic, Texas Industries.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 37.77 +1.5% -2.8%
Gold 135.20 -0.1% +13.4%
Silver 27.93 +0.4% +47.9%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 19.39 -9.2% -8.2%
Gold Stocks 564.53 +1.3% +10.6%
10-Year Yield 3.00 +1.4% -9.6%

World ETFs
Symbol Price
Change
52-Wk
USA 122.56 +1.3% +10.2%
Canada 30.44 +1.3% +13.8%
Russia 21.63 +2.3% +16.7%
India 37.73 +1.9% +20.0%
Israel 16.47 +0.9% +9.7%
Japan 10.58 +1.0% +7.4%
Singapore 13.88 +1.0% +19.2%
Taiwan 14.72 +1.6% +17.8%
S. Korea 56.56 +1.7% +22.8%
S. Africa 70.85 +3.9% +22.9%
China 45.06 +1.4% +0.1%
Lat.America 52.82 +1.4% +6.7%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 136.18 +1.5% +14.8%
Big Pharma 64.13 +0.6% -3.3%
Internet 72.13 +0.7% +22.3%
Semis 16.03 +2.1% +28.9%
Utilities 31.21 +0.3% +1.6%
Defense 18.51 +1.3% +10.1%
Nanotech 9.99 +1.3% +0.0%
Alt. Energy 9.95 +1.4% -4.4%
Water 18.31 +1.1% +12.2%
Insurance 16.07 +1.2% +18.3%
Biotech 20.58 +1.1% +27.1%
Retail 19.65 +0.1% +28.4%
Software 24.59 +0.9% +24.1%
Big Tech 53.73 +1.0% +21.9%
Construction 12.99 +2.1% +13.3%
Media 13.57 +1.1% +25.0%
Consumer Svcs 67.26 +0.8% +23.3%
Financials 54.87 +2.4% +5.2%
Health Care 64.22 +0.7% +1.3%
Industrials 63.25 +1.6% +19.7%
Basic Mat 73.57 +1.6% +21.6%
Real Estate 55.24 +1.4% +23.8%
Transportation 91.17 +1.4% +25.6%
Telecom 22.48 +1.1% +17.1%