The S&P 500 went down 2.8% last week. Friday's drop on well-above-average volume was especially troubling. At least the overbought stochastic levels on many weekly charts are starting to come down. If this doesn't turn into a larger pullback, there may soon be many good setups in quality stocks.
As I've covered a few times recently, the energy sector is one exception. For two months, the major oil-related stocks have been building strength. If not higher lows on strong volume, they have at least been rebounding strongly off support.
Conoco Phillips (COP), Anadarko Petroleum (APC), EOG Resources (EOG), Marathon Oil (MRO), Occidental Petroleum (OXY), and Pioneer Natural Resources (PXD) have charts strongly suggesting institutional accumulation is going on.
While the sharply falling oil prices may have created a ‘this time it is different' factor, the energy stocks happen to be entering a seasonally strong period. XLE, the energy sector ETF, has a averaged a 9% gain over the next 14 weeks. The two losses in the past 16 years were only 0.3% and 3.3%. Eight gains were 8% or more.
You will find most of the oil stocks I listed above are in the top 10 holdings of XLE.
It looks like institutions are thinking the current prices of the major oil stock represent a bargain. It may be time to consider re-entering oil stocks. But let these stocks, and the overall market prove themselves first. Consider small trades to begin with, adding to them as price and volume charts show new highs on increasing volume.
The pre-market news is showing another drop in the price of crude, with a strike at U.S. refineries adding to the problems. Wait until the overall stock market shows a rebound off last week's lows, and good news to come out in the energy sector (like the strike ending or oil prices rising) before entering new positions in this sector.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
Copyright (C) 2015 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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