Bullish on Crude Oil, Bearish on Energy Stocks
Posted on January 12, 2012 at 13:56 PM EST
Oil is considerably higher today, as geopolitical tensions continue, and despite despite yesterday's larger-than-expected inventory build in oil and gasoline, and unseasonably warm weather across much of the nation. Increasingly, it appears that all of the action off of the Jan 4 high at 103.74 into this morning's price at 101.94 in NYMEX crude oil futures has carved out a high-level bullish coil pattern. When complete, this pattern should resolve into a new up-leg that propels nearby NYMEX oil to new highs projected into the 106-108 area. At this juncture, only a decline that breaks yesterday's low at 100.55 will compromise the pattern. While this is bullish for crude oil and its associated ETFs like the US Oil Fund (USO) and ProShares Ultra DJ-AIG Crude Oil (UCO), the equity energy names like Exxon (XOM), Chevron (CVX) and Schlumberger (SLB) look weak, making the ProShares UltraShort Oil & Gas (DUG) an attractive ETF.
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