About a week ago, Mr. Utley and I were walking to the shopping mall to get some lunch. He like to hand chart stocks using the point and figure charting technique. "The Oil Service stocks look like they're about to make a powerful move higher" he said. I of course gave Mr. Utley a lesson in underlying fundamentals and economic conditions and how the Oil Service stocks would most likely trade. "I'll be convinced with the OSX.X trades over $80, but not until then" I exclaimed.
Well, Mr. Utley was right again and in yesterday's "market monitor" on OptionInvestor.com I alerted traders that the Oil Service Index (OSX.X) had triggered our upside alert at $80.22 and the group had some room to move on the upside.
Oil Service Index Chart -
While I was busy with the point and figure charts and retracement brackets in the Biotech sector, Mr. Utley was quietly hand charting many stocks in the Oil Service Index (OSX.X) and getting a good feel for things. Not having the time to double-check Mr. Utley's analysis of building strength, I slapped a retracement bracket on the OSX.X and liked what I saw. If they could trade above $80 there was some room to run and worth a trader's time. The MARKET sure looks like they traded the levels of retracement shown on the way down the scale and I think they'll be trading them again. Look for resistance near $95. (blue MA is 10- week/50-day, red is 40-week/200-day).
Consumer Sentiment in line
Today's Michigan Consumer Sentiment came in at 82.7, which was slightly lower than expectations for 83.4, but higher than September's reading of 81.8. Stocks have reversed earlier losses and has the S&P 500 (SPX.X) trading above its 50-day moving average at 1,101. The Dow Industrials are higher by 51 points at 9,517 and the NASDAQ Composite is unchanged at 1,775.