full link with charts:http://www.worldlyinvestor.com/article_display.cfm?article_id=12940
Look for Consolidation in Energy Stocks
By Barbara Rockefeller
11/13/2000 07:27 AM EST
If you like suspense, the energy sector is full of it these days; just check out the Energy SPDR (XLE).
Energy fell out of favor the second week of September after a near two-month rally. Successive support lines (dotted gray) were busted, although we are now on a pretty good one that is touched or nearly touched five times, one of them on Friday.
Meanwhile, support has been broken a few times, too, and we now have a triangle that must give a breakout one day soon and almost certainly this week. The blue line is the 150-day linear regression, for what it's worth.
In the top window is the MACD using 23 days as the crossover moving average (the one that tested best going back in time). We need to watch out for the crossover of the signal line, which seems imminent.
Or maybe not. Read on.
ExxonMobil
ExxonMobil (XOM) seems to be one of the main drivers of the energy sector (Amerada Hess, BP Amoco and others are falling). It seems to be headed into a decisive period, too, now trapped between a falling resistance line and an altogether too-steep support line. Such steep lines are usually unsustainable.
Note that when ExxonMobil rallied in November, it turned on a dime (green arrow). This is a relatively rare instance of a "stop-and-reverse." More often, prices consolidate (ovals) while the market decides whether to resume the old direction or start a new one. One way to display consolidation is to chart several moving averages (10 days, red; 20 days, blue, and 30 days, dark blue). Where they converge, you have consolidation. Because of uncertainty over whether the economy is slowing down and over events in Florida, consolidation is the likely outcome this time, rather than a breakout.
Contributing to this view is the Qstick indicator in the top window. It has turned down and crossed below the zero line, meaning that the closing price has been below the opening price a preponderance of times over the past 14 days. The close below the open is generally a negative sign, and Qstick measures it systematically.
Expect some sideways action and for that oval to be filled in, rather than a dramatic breakout in either direction. |
