Time for Oil Servicers to Take the Lead – Again

• Posted by Greg Harmon
• on June 27th, 2011

Those of you that read my work regularly know that I follow the spread between the Oil Service Holders (ticker: $OIH) and the United States Oil Fund (ticker: $USO) quite closely. Well it is time for the Oil Servicers to rise up against the Commodity again by the looks of the chart. The weekly chart below shows several features. The dotted blue line channel that we rode higher from break of the rising wedge in January, and the fall back in March through April to the 50 week Simple Moving Average 9links below). Since then it has been in no mans land. But it is now breaking above the

wedge again and holding. Time for a move higher again. The technical set up is as follows. The Relative Strength Index (RSI) held at the mid line and is moving higher. The Moving Average Convergence Divergence (MACD) indicator is about to cross bullishly positive. The price broke above the rising wedge two weeks ago and has held above it. Finally applying Andrew’s pitchfork The Lower Median Line (LML) is lifting the ratio higher. On a continued hold over the wedge it makes sense to be long the ratio.

Trade Idea: But 1 OIH and sell 4 USO using a ratio of 3.85 as a stop

Adjust the stop weekly to the LML as the LML rises over the rising wedge. On a touch of the Median Line (ML) take some profits.

Oil Servicers Set to Outpace the Commodity

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