It's time to speculate the energy sector...
(click to enlarge)
This chart above displays my favorite indicator - the bullish percent index - in the bottom window. It's based on 1% point & figure bullish technical pattern charts. For traders who unfamiliar with the bullish percent index, it measures overbought and oversold conditions. The indicator oscillates between 0 and 100. Any reading below 10 indicates the sector is extremely oversold and traders should prepare for a rally. A reading at 70% and above indicates the sector is overbought and may be ready to decline. The aim is to buy on improvement from the low levels, and sell on weakness at overbought levels. Specifically, when the indicator falls below the oversold level and reverses higher you want to buy. And sell when it's overbought above 70% level and rolls over.
The blue circles on the bottom window indicate bullish percent index buy signals. As you can see, each one preceded a rally of more than 20%. The index rallied hard yesterday, but bigger gains lie ahead.
Bottom line - it's not often you get this kind of opportunities to profit in oil stocks. So take advantage of this favorable risk/reward setups on the long side. Used Tuesday's low as your stop loss level.
