TECHNICALS – TREND CHANGE IN OIL STOCKS HAS COMMENCED

Select key oil stocks have generated technical sell signals over the last week. Given this has occurred in a cluster flags the energy sector as having reached a (negative) turning point and indicates a trend change is underway. The oil price has not (yet) generated a technical sell signal, but commonly the stock technicals lead the related commodity. Looking back to early February a significant number of technical buy signals had been generated in both the energy and resources sectors - subsequently resulting in 9 completed technical stock trades i.e. the nominated technical buy signal targets were reached. It was “the cluster of stock technical signals” that identified the turnaround in these sectors early in the upswing. A strong rally subsequently occurred. Technical buy signals were also generated by iron ore (in late January) and by Brent crude in February with gains of 40% and 18% respectively, subsequently occurring. The “cluster of stock signals” in a sector/s has been effective previously in identifying sector turning points.