The energy sector suddenly woke up this week, giving bulls one more reason to start building positions.
After a steep bear market, such as the one just suffered by crude oil and energy stocks, it is tempting to take any solo technical signal as the sign from above that the decline is over. That is the nature of a bear market rally and the famed dead-cat bounce. However, positive signs in energy are starting to build and that makes now a good time to start to nibble.
John Kosar, director of research at the technical advisory Asbury Research, adds a different insight that dovetails with this conclusion. “While there is nothing compelling in the crude oil data right now, commercial hedgers in the heating oil contract are holding a near-record net long position which represents an aggressive bet by the smart money that this asset is undervalued. Crude oil and heating oil prices are positively correlated to one another.”
Click the linked title above to view the entire article (access requires subscription).
Asbury Research subscribers can get our latest research on US market sectors, including our monthly Sector Watch report which includes our Sector Rotation Model’s current positioning, by logging into the Research Center.