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Oils

from ChartWorks:: published by Institutional Advisors

Bob Hoye
Technical observations of RossClark@shaw.ca
November 25th, 2006

The relationship between commodity prices and related stocks has been a valuable tool in the analysis process. The current bullish divergence of the XOI versus and Crude Oil is one that has shown up seventeen times in the past three decades. The results have been consistent. . . rising stock prices in the ensuing weeks. A daily RSI(14) reading in the mid 70s to 80s should coincide with the next high in the index.

In addition to individual stocks, there are exchange traded funds that offer investors an opportunity to participate in the sector. In the US, the XLE Energy Select SPRD and OIH Oil Service Holders have a good correlation with the XOI index. In Canada, the XEG is an iShare of the TSX Capped Energy Index. All trade with good liquidity and have options available.

Bullish divergences over the past three decades

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Bob Hoye
November 25th, 2006

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