I don't know much about short-term (hourly/daily or even weekly) TA, so I'll have to defer to you on that. From a more macro TA perspective, DO just broke long-term resistance in the low 40s, which it has been trying to do for the past 12-13 months. The breakout occurred on big volume, which after such a long base suggests a substantial upside move over the next 6-12 months. I see some resistance in the low-to-mid 50s, and then again in the low-to-mid 60s due to old resistance at those points from two to three years back. I don't expect the mid-50s resistance to last more than a few months, but I do expect DO to stall around 60-65 for several months or longer before going on to new all-time highs. All this assumes, of course, that oil stays at $22-25 a barrel or more. If I were short DO now, I would look to cover at 44 - 44 1/2, which looks like the new support level. I doubt DO breaks down through that absent some fundamental change in the company or the industry. With regard to shorting drillers once oil breaks, I'm with you on that one. I learned my lesson in '97-'98 by holding my long positions too long. I'll probably wait to short until a number of drillers break their 200 DMA to the downside with volume. Due to the current state of the world economy, I believe that this cycle probably has at least two more years before that happens.
RK |
