We know that energy stocks in both the US and in Canada are not participating in the current global stock market advance. The problem could be investor fears about a double dip recession which could kill the demand for crude. It is with these fears in mind that investors are unwilling to bid for energy stocks.
The obvious strategy for the technical analyst is to study the price of crude and natural gas in order to predict any movement in the related energy stocks. In other words the price of crude leads the price of the stocks.
On the other hand why not study the price of the energy stocks in order to predict any movement in the crude & natural gas complex. In other words the price of the stocks leads the price of crude and natural gas.
The problem is that sometimes crude leads and sometimes the stocks lead – so we must find another somewhat over-looked way to study the energy complex. I find the oilfield service stocks will often lead the energy complex. The chart below displays two oilfield services companies that are advancing during a period of little investor interest in an otherwise dull energy market. Not a sheep in sight – could be time cut your favourite energy stock from the herd
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