Look At This Interesting Correlation
We played a little game in the office here today.Â
Every time they said the word “oil†on CNBC, you had to take a swig of beer.Â
I’m hammered, so pleese excuze any missspelllings.Â
In case you haven’t heard, oil
costs a bunch of money. It’s now over $60 a barrel. While that sounds like a
lot to most people, it doesn’t factor in the sharply rising cost of barrels —
which nobody seems concerned about.
Jokes aside, with oil making
headlines, the stocks that will be making headlines are…oil stocks! They are
the most obvious beneficiaries of the rise in oil prices. What many oil stock
investors don’t realize, though us their propensity to top out BEFORE the price
of oil drops. Below is a one year chart showing both oil and the OIX–the Oil
Index. Notice those areas where a drop in the OIX preceded a drop in oil. (I
placed red lines near the OIX tops.)
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The point today is simple:Â Be
very careful when trading energy stocks, and make sure your cues to sell are
based on technical support levels in your stocks – not in the price of oil.
Best of luck with your trading,
Rob
P.S.
Click here for the Hanna ETF Money Flow System.
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