Wednesday, May 21, 2008

Some Leaders Breakdown, Oil Charts Show Some Climactic Volume

This is the only "short" I entered today. I am amazed at the volume in this inverse ETF - much higher than the all time high. One of the reasons I have thought oil is due for a major pullback is the volume I saw on this ETF all week. I put a chart of the top four holdings in this ETF - XOM, CVX, COP, and SLB. XOM certainly looks very bearish after today.

DUGXOM, CVX, COP, SLB
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

Here are a few of the oils that reversed in a bearish fashion today. The volume on these is huge. I have no idea if this will mark a short-term top in the energy sector - when you have such strong momentum in one sector, you have to remember that there are a lot of people out there that missed the big move and are just waiting to buy the dips. We'll see if that happens, but if nothing else, the volume on these looks quite climactic.

ARD, CNQ, NGS, OXY
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

Here are some of the stocks I see breaking down today. Charts like SVR and FSIN, which had earnings-related breakouts and continued higher after them, are not good to see.

SVR, DECK, DGLY, VIT
RICK, BWLD, FSIN, PNRA
FSLR, AAPL, GOOG, KOP
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

I have no longs that I am interested tonight, but at the same time found no shorts I was interested in either. We might just be in for a period where doing nothing is the best and safest play - I just don't see many low-risk trade possibilities out there right now. I am posting the charts of SWC and PAL tonight simply because both look like they could be setting up here and had huge runs back in January as the market broke down in earnest. If the same thing happens here, perhaps these will run again. Gold has certainly picked up over the past week or so. I plan on watching these two for the next few days.

SWC, PAL
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

We are a little oversold now in the very short-term so it is possible we move higher tomorrow or Friday. However, I don't know if that will change the past two days unless we get some major volume on the bounce. Sometimes the best play in the stock market is to not play at all. The rest of this week going into the three-day weekend is probably one of those times. Best of luck Thursday.


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