This Oil Trade Could Make You 25% in a Week

Earlier this month, I told you my favorite oil stock indicator was flashing a buy signal. It's turning out great...

 

As you can see below, oil has had a wild ride over the past year. After peaking above $140 per barrel last July, and then dropping to just above $30 in December, oil has made a steady, quiet move higher to $45.

 

Now, as you can see from the following chart, oil is on the verge of breaking out to the upside of an ascending-triangle pattern:

 

 

 

A move above $48 per barrel projects a rally to as high as $70. Obviously, that'll be a bullish development for oil stocks. And if the overall stock market can rally as well (and I think it will), there will be twice as much buying pressure in the oil sector.

 

Here is an updated chart of the bullish percent index for the energy sector (BPENER)...

 

 

 

This chart displays the percentage of oil stocks trading with bullish technical patterns. Oil stocks are overbought whenever the chart rises above 70, and the sector is oversold when the chart drops below 10.

 

The circles mark the various buy and sell signals generated over the past few months. The most recent buy signal triggered early this month, and there is plenty of room left for it to run.

 

So with the overall market set to rally... and with the price of oil on the verge of breaking out to the upside... and with oil stocks in the early stages of a buy signal, the smart bet is on higher oil-stock prices.

 

Best regards and good trading,

 

Jeff Clark

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