Today's action is as close to a technical breakout from the basing pattern we have had since January. It helps to pull up a 6 months chart here and look at every drillers. The thing to note is that most drillers, water or land (except GW) are on the right side of the U. It would not be surprising if we look back 3 months from now and see this is where the breakout occured. A chart dating back to last January will also be helpful here as one can see the effect of a multi-month up phase of a bull run that spanned 6 months last year.
If we are indeed at the beginning of this up-phase, it would be easier just to hold and not trade as much. By going back to last year's 6 month bull run and speaking from my recollection then, I believe there will still be many short term cycles going forward but the correction phase will tend to be smaller than the upsurge phase. Therefore, one has to get ready to reverse course when the correction gets about half way below the previous pivot high (if one trades). Also, the up phase and down phase will tend to be longer than what we have had for the last 6 months. Therefore, Ron's short term stochastics may have to be adjusted longer. IQC's stochastics may just be right for this, at least in the first 2 months.
According to the early sell system (Ron's), we are ripe for a pullback because we are overbought. This may come but the correction may be shallower this time around. The most intriguing chart pattern is the alternating candles for most water drillers which now span 6 days. What this means I still am not sure but it sure suggests the mo-mo's are back in and out in very short duration. We may also get the surfing the upper BB wave phenomenon going, with today being the second day.
Overall, one has got to hold some driller stocks at this juncture. Driller laggards that I know include GW, BDI, PKD, ESV, GLM and PDE. |
