From the Desk of Ian Culley @IanCulley
Black Gold is breaking out!
Crude oil is flipping weeks of indecision into conviction following a hard retest that frustrated traders earlier this month.
Let’s take a look…
Check out crude’s upside resolution to fresh five-month highs:
Yesterday marked the completion of a tight bull flag – a typical characteristic of an uptrend.
The path of least resistance points higher toward our 95 target.
However, I would be remiss not to mention momentum. The 14-day RSI has yet to register an overbought reading above 70.
This isn’t an immediate concern. But if the crude oil rally does have legs, momentum will reach overbought conditions. In fact, the energy sector’s recent performance is showing no signs of stress.
The Oil Refiners ETF $CRAK is trading at all-time highs, and the Energy Sector ETF $XLE isn’t far behind. Plus, energy stocks are popping up everywhere on our bottoms-up scans—from the International Hall of Famers to Freshly Squeezed.
It’s not just oil and gas names. Natural resource stocks are ripping through our breakout levels, and the Materials Sector $XLB is also posting new all-time highs.
Commodity-related areas of the market are on fire!
In the Trade of the Week, I’ll outline two commodity stocks triggering buy signals.
Happy Easter.
-Ian
We’ll be back next week with an updated COT Heatmap and Commodity Chartbook.
Trade of the Week
Check out Allegheny Technologies $ATI, a $6.3B metal fabrication company:
ATI recently hit a fresh 10-year high after rallying more than 800% off the 2020 lows.
Don’t let the triple-digit returns scare you away. Commodity stocks produce monster gains. The Allegheny rally has plenty of gas in the tank.
We’re long ATI above 47.50, targeting the former all-time highs at approximately 73.50 over the next 6-12 months.
Here’s Teck Resources $TECK, a $22.7B natural resource E&P company:
TECK is digesting gains at a key retracement level, coinciding with the 2022 highs. This isn’t the cleanest level to trade against, but Teck Resources gapped higher to fresh six-month highs this month.
We want to own TECK as long as it trades above 42, targeting 65 in the coming 6-12 months.
Thanks for reading.
Enjoy the holiday weekend!
Allstarcharts Team
