After oil stocks' big gains, it's time to sell
By Thomas H. Kee Jr.
The recent spike in oil prices left the commodity in a position of retracement
When West Texas Intermediate (WTI) crude was breaking out above its resistance lines, our Sept. 7 article on MarketWatch provided a list of stocks and exchange traded funds (ETFs) that would likely do well. And they did.
The performance of those, to recent highs, has been solid. But our opinions are changing.
On Sept. 28, we advised our subscribers to exit direct oil stocks and ETFs, and on Oct. 2 we recommended the closing of positions in other oil-related stocks. WTI settled at the lowest level in more than week on Monday.
Here is the percentage change of the stocks mentioned in the Sept. 7 article (http://www.marketwatch.com/story/with-oil-rising-the-most-lucrative-investment-may-be-us-shale-producers-2017-09-07):
Ticker Closing price - Sept. 7 Closing price - Sept. 28 Difference US:OIL $5.14 $5.55 8% US:USO $10.08 $10.65 6% US:UCO $16.50 $18.61 13% US:CVX $111.82 $118.25 6% US:XOM $79.04 $82.45 4% US:BP $35.50 $38.43 8% US:CHK $3.87 $4.46 15% US:WLL $4.28 $5.83 36% US:APC $42.25 $50.04 18%
Our rationale and the technicals
Oil, and other commodities too, is traded largely based on technical moves, and the most recent spike in oil prices left it in a position of retracement. There has been a decline already, and there might be more to come. Oil prices could fall back well below $50 a barrel.