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Duarte added: The oil sector seems to have found some balance of late, with the bellwether oil service sector starting to show signs of forming a base. Whether this is the all clear signal or not remains to be seen. Yet, the fact that OIH has not made a new low lately despite fairly weak oil prices suggests that the smart money is moving into a sector whose future long term prospects remain fiarly attractive.
The oil service sector is usually the most sensitive branch of the oil patch, as exploration and expensive offshore activity is often cut before other types of operations. So, despite the important role of these companies, when things get tight, they are some of the first companies to feel the pinch.
They are also some of the first stocks in the energy patch to start to move higher when things start to stabilize. And that may be what we're seeing now, as OIH is off of its mid-October bottom, and holding above its 20-day moving average.
Duarte's conclusion:
A move toward 100 is quite possible in the next few days, if cold weather starts to affect the energy complex. What happens after that is anyone's guess. Yet, as long as there are no new lows, the basing process will be intact.
And that's important for those who have a multi-year time horizon.
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Duarte partners with the Investors Resource Center at Investrend Information (http://www.investrendinformation.com).
Duarte's IntelligentForecasts.com (http://www.intelligentforecasts.com) provides free news coverage and analysis, and his daily articles and news summaries offer recommendations and analysis for ETFs, and individual stocks in the technology, health and biotechnology, and energy sectors. Duarte has combined expertise in health care, energy, and the effects of politics and global intelligence on the financial markets offer a unique blend of insight and information to thousands of active investors and political and intelligence aficionados around the world on a daily basis.
He is the author of: Futures And Options For Dummies, Successful Energy Sector Investing, Successful Biotech Investing and co-author of After-Hours Trading Made Easy. In early 2001, in Successful Energy Sector Investing, he correctly predicted that Venezuela's political problems could lead to an energy crisis in the United States. He has also appeared as a weekly guest on Market Mavens Radio and has logged appearances on KNX radio in Los Angeles, Financial Sense.com radio, and Wall Street Radio.
One of CNBC's original Market Mavens, Dr. Duarte has been writing about the financial markets since 1990. His articles and commentary have been featured on CBS Marketwatch, Barron's, Smart Money, Medical Economics, and in Technical Analysis of Stocks and Commodities magazines. In 2003, Doctor Duarte received second place, in the professional section, of the Medical Economics Investment Challenge with a 12-month return of 42%.
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