ENERGY STOCKS TUMBLE - CRUDE OIL NEAR TERM DOUBLE TOP?
ENERGY STOCKS DROP... Energy stocks are down sharply today with stocks in the oil drilling industry experiencing the heaviest selling. Transocean (RIG) appears to have completed a two month topping formation (see shaded area). In addition, the stock has fallen below its November low and the bottom of its neutral range support. Given this negative price action, the stock may be poised to fill its gap near 20. The next support level beyond the gap exists near 19. Nabors (NBR) is down today on heavy volume and appears poised to penetrate its November lows. Noble Drilling (NE) which had been holding up well has penetrated its 50-day moving average which is not a good sign.
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CRUDE OIL FORMING NEAR TERM TOP?... The recent stalling of Crude prices near its prior December high appears to be forming a near term double top (see shaded square). The MACD histogram (below chart) is starting to turn down and is very close to reversing its November buy signal. A break below 30, on a closing basis, would complete this double top pattern indicating further downside risk toward 28.
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