Crude Oil over $100, but What About the Other Energy
- Posted by Greg Harmon
- on February 23rd, 2011
Its all the rage to talk about Crude Oil over $100/barrel. Egypt did not move it much but Libya sure did, or maybe as many of us chartists have been saying it was going there anyway (link below). But while this debate plays out did anybody notice that no other form of energy is moving higher? Not batteries, coal, solar or natural gas. In fact most are moving lower recently. Well aside from a Economics 101 discussion about Substitutes, the charts say it may be time for that to change. Here are 4 energy related stocks to watch.
A123 Systems, ticker: AONE, had been moving higher since the end of January, but stalled at resistance near 10 last week, before the big pullback this week. It has lost 10% in two days. But the move Wednesday was a much smaller body candle and ended holding very near the 200 day Simple Moving Average (SMA). The Relative Strength Index (RSI) is leveling as well. This area around 9.00 has been support previously. This could be slow to rise with all the SMA’s in the way, but entering long with a stop around 8.90 (or enter there) could see 10 again.
The Market Vectors Coal ETF, ticker: KOL, has been in a descending triangle since the beginning of the year with a base at 45.35. It has now bounced off of the base and is heading to the top of the triangle at 47.18. The Bollinger bands are squeezing as the triangle is narrowing and the price s now moving higher. A range trade could be played entering here with a stop at the base, and a target of at least the top of the triangle. The RSI is curling up and the Moving Average Convergence Divergence (MACD) is about to turn positive. If that continues they might give it the support to get through the triangle to first resistance at 50 and a pattern target of 51.85.
The Guggenheim Solar ETF, ticker: TAN, has been in a rising channel since the end of December. Recently it has fallen from the top of the channel and has Wednesday tested and held support at the bottom near the 20 day SMA. During the entire channel move higher the RSI has remained in bullish territory and that did not change with it holding over 50 during the latest pullback. The MACD is crossing lower so it may test the bottom rail again, but if it holds then entering a long position, with a stop just below the rail, and a target of the top rail, could create a nice trade.
The United States Natural Gas Fund, ticker: UNG, has been in a long term downward trend pretty much since it was created as noted by the solid blue down trend line at the top of the chart. The recent shorter term downtrend seems to have found support at 5.19, and printed a bullish engulfing candle Wednesday on increased volume. Also notice that the MACD is improving and the RSI is turning up off of the technically oversold line. With a stop at new lows, a long trade could head higher through resistance at 5.52 then the bottom of the gap down level at 5.70 and the SMA’s at 5.80 before closing the gap and moving to the long term downtrend currently at about 6.15.
TAN and UNG look to be the best of these stocks but a reversal in the market would likely lift all four. Keep these in mind as you prepare for the trading day and trade’m well.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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