Our proprietary energy cycle indicator turned down last week from the divergence as noted previously.
We have a serious divergence this week between oil and oil stocks. Such divergences have almost always led to a substantial decline in prices in oil-related ETFs.
It so happens that we have a new buy signal and set up on the inverse ETF this week.
The energy sector cycle is down and a multiweek correction is in progress. Traders can consider shorting the sector via an inverse ETF, and manage their risk by using stops.
Jack Chan is the editor of Simply Profits at www.simplyprofits.org, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the U.S. dollar bottom in 2011.
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All charts courtesy of Jack Chan.