Oil Stock Breakout: Bullish Trend Reversal IN?

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Commodity Trading Research
Oil Stock Breakout Bullish Trend Reversal IN?
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• Hi, My name is Justin and Im with Commodity
  Trading Research, today were reviewing our
  recently published article

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• Oil Stock Rally- More Gains Ahead?

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• Much like the abrupt rally in gold stocks we
  talked about earlier this week, oil stocks are
  seeing similar bullish performance.

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• In fact, the Energy Select Sector SPDR XLE
  rallied 13 over the past four trading sessions.
  As you may know, XLE is the top dog of energy
  ETFs as it currently has assets under management
  of around 11.5 billion.

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• Without question, XLE is the best representation
  of overall oil stock performance the market has
  to offer.
• But heres whats really important

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• Over the past few days a number of very important
  (and bullish) technical developments have
  occurred in XLE, as well as other energy assets.
• Heres a quickbreakdown of the situation

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• Oil Stock Rally A Much Needed Technical Break

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• As youre very likely aware, it has been a
  remarkably tough year for US oil producers. With
  the price of West Texas Intermediate (WTI)
  skidding to multi-year lows under 40 a barrel,
  much of the US

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• exploration and production industry has crashed
  on the rocks.
• This chart sums it up pretty well

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• As you can see, theres been no love lost on the
  oil industry in 2015. At one point not so long
  ago,XLE succumbed to a vicious 30 yearly
  downturn. But notice the price action on the far
  right of the chart. Heres a closer look

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• Notice how XLE broke above (green circle) the
  long-term downtrend (red line) from the April
  2015 highs. The break of this very important
  technical level suggests a bottom may finally be
  forming for the beleaguered energy market.

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• Analyze the charts of other energy assets like
  the SPDR SP Oil Gas Exploration Production
  XOP, Exxon Mobil XOM, ConocoPhillips COP,etc.
  and youll find similar patterns. But thats just
  the start of it

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• The price of WTI is suddenlybreaking higher from
  a month-long trading range at 45 a barrel.
• Check it out

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• After a month of monotonous sideways trading it
  appears crude bulls are taking another shot at
  moving this important commodity to higher ground.
  

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• Given the triangle pattern (red lines) in WTI, a
  rally to the low 50 a barrel range is likely in
  coming days.

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• Is there a fundamental reason to support such a
  bullish move?

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• While the US oversupply problem is nowhere near
  over, there are signs it will soon start
  alleviating. Case in point, last weeks Baker
  Hughes rig count revealed another big downturn.

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• As of October 2, 2015 there were 614 crude
  directed rigs drilling for oil- a stunning 61
  drop from the 1,591 rigs reported this time last
  year. Clearly, oil drilling in the US is
  suffering a severe slowdown.

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• Its just a matter of time before thisdrastic
  drilling reductionstarts turning US production
  numbers sharply lower. But thats not all

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• There may also be a fear premium building into
  the oil market thanks the situation in Syria

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• . I wont rehash all the worrisome details here,
  but Russias involvement in the 4-year old Syrian
  civil warcouldimmensely complicate matters in the
  entire Middle East region.

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• Bottom line

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• The culmination of the technical factors in the
  charts above along with the fundamental points
  just discussed, increase the likelihood the
  energy markets have finally found bottom.

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• How do you capitalize on it?
• Carefully placed bets on oil stock ETFs may reap
  outsized rewards in coming months as energy
  markets rebound.

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