GASOLINE PULLS BACK FROM OVERHEAD RESISTANCE AND CAUSES PROFIT-TAKING IN ENERGY PATCH -- EXXON AND CONOCO PULLBACK FROM THEIR SEPTEMBER HIGHS

THIS IS NORMAL SPOT TO EXPECT A PULLBACK ... Everyone is looking at the chart of crude oil. They should also be watching gasoline. That's because gasoline futures have reached their next upside target and are starting to pullback from the most overbought reading since last summer. That's also helping to cause some short-term profit-taking in the oil patch. Comments from President Bush today are helping to push gasoline futures 2.6% lower as well. The last time I showed the chart of unleaded gasoline prices was back on April 11. I wrote that the next upside target was the late-September peak near $2.20. Chart 1 shows gasoline having reached that interim resistance barrier. The 9-day RSI line has reached the most overbought reading since Hurricane Katrina last summer -- and it's starting to move lower. That's indicative of a short-term top. I wouldn't be suprised to see the price dip closer to its 20-day average which is currently at 2.02 but still rising. The pullback in gasoline is pulling energy stocks lower today.

Chart 1

BIG ENERGY STOCKS STALL AT RESISTANCE ... Another reason for today's pullback in energy shares is that a number of big energy stocks have reached resistance barriers of their own. The next chart shows Exxon Mobil backing off from its September peak near 65. That's a logical spot to expect some short-term profit-taking. Chart 3 shows ConocoPhillips pulling back from its September high. These don't look like final tops to me. Just normal pullbacks from overhead resistance barriers. But it's enough to cause some nervous selling among traders looking to lock up some profits. In the case of Conoco, there should be sufficient support in the 66-68 region to cushion any further selling.

Chart 2

Chart 3