OIH Weekly and the DUG ETF 051807

It’s been eight weeks since I mentioned the bigger time frame for oil stocks. I wrote, “the OIH tried to break out of that weekly base. After trying to move higher early this morning, the stocks in the oil sector lost it. I’ll start looking for shorts if they don’t move higher soon.” That pause I saw, was quickly reversed, and the OIH ended that week at the high. We’re now 30 points higher in the OIH, with 10 higher weekly lows. It’s time the sector took a rest. Oil stocks are either going to consolidate here, or pull back. If the sector goes much higher in the short term, prepare for a blow off top. That’ll be the end of this sector’s charge higher.

I’m watching DUG, the Proshares oil and gas ultra short ETF for a reversal. This ETF is thinly traded, but should be a mover if the oil sector pulls back. I’ll buy into strength. Don’t average down.