OPEC PRODUCTION CUT BOOSTS OIL AND OIL SHARES

John Murphy
by John Murphy,
Chief Technical Analyst, StockCharts.com

OIL BOUNCE HELPS ENERGY STOCKS... OPEC announced a surprise 3.5% cut in production. That's boosting oil prices 90 cents in morning trading and is causing a bounce in oil shares. The energy sector is up 1% and is the only sector in positive territory today. The Oil Service (OSX) index is up 2.3% and is the strongest part of the energy patch. Chart 1 shows the OSX moving back over its moving average lines. Chart 2 shows the AMEX Oil Index (XOI) rallying as well. Coming just two days after Monday's plunge in the U.S. dollar, today's bounce in oil and oil stocks may cause some nervous selling in the rest of the stock market.

Chart 1

Chart 2

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John Murphy
About The Author:

John is a renowned author in the investment field and former technical analyst for CNBC. Considered the father of intermarket technical analysis, his books include “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Learn More 

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