OIL JUMP ATTRACTS BUYING INTO ENERGY PATCH -- GOLD STOCKS ARE IN SUPPORT AND OVERSOLD

MAY MAY BE TURNING HIGHER... In my last article on energy, I wrote that I thought crude oil would find a floor above $40. So far, that new floor has held. After a successful retest of its early December low, crude oil traded over $47 today and is trying to close over its mid-December peak. If it can accomplish that, it will have completed a small "double bottom" on its chart. It will also have closed back over its 50-day moving average line, after having already exceeded its three-month down trendline. Its daily MACD lines are now in positive alignment. That's making energy shares today's strongest sector. The Oil Service Holders (Chart 2) have held well above their early December low in what could be the start of a "triangular" formation (see converging trendlines). That would be a bullish pattern. Its relative strength line, however, is still beneath a three-month down trendline. A move over that resistance line would be a positive sign.

Chart 1

Chart 2

Chart 3

ENERGY SPDR BOUNCING OFF SUPPORT... The Energy Select Sector SPDR (Chart 3) hasn't fared as well as the Oil Service Holders. But it is in oversold territory (see CCI oscillator) and is bouncing off chart support drawn under its October/November lows. The daily MACD lines, however, are still negative. With the traditionally weak fourth quarter for the energy group over, this would be a logical spot for the group to attempt a rally.

GOLD AND GOLD STOCKS TESTING SUPPORT... I've been asked if the long-term uptrend in gold and gold stocks is still intact. It sure is. But it's being tested. The chart of the Gold ETF (GLD) is nearing potential trendline support near $415. The Gold (XAU) Index is testing a number of key chart supports (Chart 5). One is its 200-day moving average. Another is the up trendline drawn under its May/August lows. A third is the June/July peaks (see circle). The gold group is also starting to look oversold, which should attract some new buying at current levels.

Chart 4

Chart 5