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Buy Refiners This Morning and Make Huge Gains By Lunch

By Jeff Clark
Thursday, September 4, 2008

In the midst of a general market meltdown, one sector looks ready to pop higher.
 
It's the refiners.
 
I first mentioned the refining stocks on July 29. Since then, Frontier (FTO) is up 8%, Valero (VLO) has gained 9%, Tesoro (TSO) is up more than 24%, and Alon USA (ALJ) is up more than 50%.
 
This is just the beginning.
 
Refining charts look better than any other sector right now. Just take a look at this chart of Tesoro...
 
 
 
This is a perfect example of an ascending-triangle pattern. It's a series of higher lows followed by rallies that continuously bump up against the same resistance level. More often than not with this pattern, resistance gives way and the stock bolts higher.
 
I'm betting that will happen with the refining stocks. And I'm betting it will happen as soon as today.
 
You see, the weekly gasoline inventory results will be released today at 10:30 a.m. Eastern time. For the past three weeks, gasoline inventories have declined more than expected. And in each case, the refining stocks rallied.
 
I expect we'll see the same type of action today.
 
Admittedly, I've been bullish on refining stocks for the past few months. And we haven't seen much upside progress. But this sector is all but given up for dead, and no one is talking about its improving technicals and fundamentals.
 
There isn't any other sector that appears more poised for a rally. And I'll bet six months from now, you'll be slapping you're forehead and saying, "I can't believe I had the opportunity to buy those stocks at those prices."
 
The refining sector offers the best risk/reward setup of any sector I follow right now. You'll do well to consider an investment in one of the refiners.
 
Best regards and good trading,
 
Jeff Clark




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Market Notes
A few regional banks survive the storm... Hancock Holding, First Financial, S.Y. Bancorp, IberiaBank, ESSA Bancorp, and Suffolk Bancorp at new highs.
 
H&R Block finds a new high... the tax-prep behemoth is up 40% this year.
 
World's largest gold miner Barrick Gold hits 52-week low.
 
Construction giants Foster Wheeler and McDermott at new lows.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1224.71 +0.3% +11.4%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.19 -0.6% +7.2%
Euro 1.34 +1.4% -11.0%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%