Has The Oil Service Sector Stalled?

By Jim Donnelly, Olson Global Markets

After stalling a number of times near the $73/$74 level, the price of crude oil appears to need a catalyst to “breakout” and extend higher …that’s if it’s going to happen over the near-term. There are hints, however, that further upside gains may be just around the corner.

On longer-term charts, for example, the Philadelphia Oil Service Sector Index (OSX) appears to be in position to take a run up toward key “cross” trend line resistance now located at the 193 level …and possibly break above it.

Monthly stochastic studies are rising from an oversold condition paralleling a bullish reading on its Relative Strength Index (RSI). And although it’s monthly MACD (Moving Average Convergence and Divergence) oscillator is still declining, it appears to be basing out and is nearly ready to issue a bullish signal. For reference, MACD has been locked onto a bearish signal since July/August 2008.

A break above key resistance at 193, if it occurs, would be considered to be a bullish “breakout” and could carry oil service stock prices higher for months to come.

http://www.ogmarkets.com

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