Lower pump prices to come - Energy sector next to drop

Dear Readers, I saw many topish patterns two months back and have actually called a top to the stock market in my many subsequent posts. Please click to read: "Go Defensive, protect your capital" & "Possible trend change in the making". According to the charts, the energy sector looks like the next to drop as the topish patterns are setting up for more lower prices to come, in my opinion. For investors with long positions in the energy sector, my advice is to sell, sell, sell !!

A few days back, pump operators had actually jack up the retail price of petrol. I can't fathom the rationale behind the raising of the prices. It doesn't make any sense at all. Perhaps the last draw of the blood from the general public? I foresee cheaper pump prices to come. One just need to take a look at the charts below to understand. A top takes many months to form and the energy sector now finds itself at the edge of the cliff whereby a little nudge would start the free-fall.

Direxion Daily Energy Bear 3X shares (ERY) has an inverted Head & Shoulder patterns formed over many months. Look at the volume for the past few weeks. Goodness me.... I repeat: investors who are long energy sector, SELL !!

For those of you who are not comfortable with shorting the market, please go into cash position. Good weekend to all.

 

Energy stocks - Short-selling opportunity

Dear readers, I am seeing more and more short selling opportunity for stocks in the energy sectors. Below are two stocks on my short-sell watchlist. I will be averaging in my short entry with stop loss just above the red Kijun Ichimoku line.

Chesapeake Energy Corp broke out of its decending triangle last week on high volume and its a short opportunity now as it retest its resistance at the neckline.

Stone Energy Corp (SGY) is currently hugging the 50day MA and had closed below the 50day MA for 2 days. Any signs of weakness today towards the closing on Maday will see me initiating a short position on this stock.

Always trade with stop loss and the correct position sizing !

Energy sector - Topish Signals

Dear Readers, while the markets seemed to go on and on higher without pausing to catch its breath, a correction looks imminent for the energy sector as topish signals are showing on charts of the Russell 1000 energy index and energy leader Exxon Mobil Corp (XOM). All news seemed rosy now but do remember that the market is a forward looking indicator and we should take note of these clues which Mr Market is dishing out. If you are long on the energy sector, it would be wise to go into cash to see how the markets react. One can always buy back the shares if it really does go higher but losses are harder to make back.

Russell 1000 Energy index

Exxon Mobi Corp (XOM) - A break of the double top would break the bearish spell.

Finally, a look at Transocean (RIG). Its chart is already exhibiting weakness with a head and shoulder reversal top formation already formed.

Go into cash position.