STI - Trading-Oil and Others

 

Out of 50 public companies in the oil industry—spanning all sub-sectors from exploration and production to refining and services—with an average daily volume exceeding 1,000,000 shares, a price above $10 per share, and a market cap over $5 billion, 45 of them closed higher yesterday.

Of those 50, 44 closed above their 50-day Simple Moving Average (SMA), and all 50 are currently tracking above their 200-day SMA.

Additionally, 26 of them currently exhibit a positive slope in price.

Today, May 19, out of those same 50 oil companies, 43 managed to close higher once again, while only 7 registered a negative closing price.

At the close of May 18, 26 companies had a positive slope; today, that number stands at 31. Are we witnessing the birth of a new bullish trend in the oil sector?

Let's take a closer look at one of them: Halliburton Company (NYSE Ticker: HAL). It is one of the world's largest multinational corporations in the oilfield services and energy sector (outpaced globally only by SLB). Their business model does not revolve around extracting or selling oil directly, but rather providing the technology, engineering, and machinery that enables oil companies to do so.

It shows a well-defined trend so far. As the saying goes, "A trend is assumed to be in effect until it gives clear signals that it has reversed."

HAL rallied 2.44% yesterday, and followed through today closing up +0.47%.

 

 

 

And how is "the index" holding up? Has the SPY ended its nearly 2-month upward trend and shifted into a negative posture? Or is it simply taking a brief pause to catch its breath before resuming the run? A trader's job is not to predict, but to react. Therefore, we will continue to monitor the index, and in the meantime...

 

Looking at KRE, the regional banking ETF, my watchlist includes 28 banks. On May 18, all 28 closed in the green, which looks more like a pause within a broader downtrend. Today, May 19, 22 of them closed lower. The chart distribution of KRE mirrors virtually all 28 bank charts in my screen; they appeared to be triggering a downtrend, but price action over the last 5 days has shown indecision. We will watch closely: if the downtrend resumes, there is a massive selection of banking stocks ripe for short selling—and the beauty of bank stocks is that practically all of them move in tandem.

 

 

My core conviction: this rally in the SPY lacks fundamental backing when two of the most heavily-weighted stocks in the index failed to join the move.

 

Good night.