Oil Sector Trading Strategy - DIG OIH 082608

Oil stocks bounced again this morning after falling the past two days. I think OIH and DIG can get back to their 50 day moving averages on this bigger (number of days) bounce. It won’t be in a straight line though. Here’s how I’m playing it.

Both DIG and OIH put in higher high candlesticks today. That should trigger buyers. I’m waiting though. I think both will move down to yesterday’s pivot low, possibly go under those pivots, and then move back up. The old shakeout first. I actually have some DUG right now in play for this potential shake that’s working as I write. Oil inventory numbers are tomorrow, which will provide a catalyst for movement.