Everything comes from price. Any indicator that I use is a derivative of price. No matter what you feel or how certain you are, the price is always right. As oft-quoted Jesse Livermore says, "there is only one side of the market and it is not the bull side or the bear side, but the right side." Analysis of price can put you on the right side.
In my current analysis of price, I am seeing a potential upside move in the energy sector. Many of these charts look to be bottoming on the daily timeframe. I caught this by running the following scan.
Now take one more step. Click on the filter tab and under Sector choose energy.
Look at how many energy names have set up type II countertrend buys.
This is a sector to look at for buy candidates. When you see a countertrend theme playing out like this in a sector, you have to drill down into that sector and find some buy candidates. Here are two of my favorite charts:
Valero (VLO)
Tesero (TSO)
I have been bearish on equities for some time. I still am bearish on many sectors, including many NASDAQ ($COMPQ) technology names. If you were positioned well for this downtrend , you have likely made very good returns. Now be sure that you are taking profits where you should. If you agree with my analysis of energy, this is a place to possibly add some exposure. For a trade of course.
Joel Stahl
Hi Joel,
Is one of the reasons for picking VLO over other type 2 buy energy candidates, the absence of any sellers bar's or so far very weak counter trend.
Thanks
Posted by: anthony | September 25, 2008 at 03:38 PM
I like VLO because the lower low is ever so slight and oscillator shows big divergence.
Posted by: Joel Stahl | September 25, 2008 at 05:40 PM