By Gareth Soloway on May 17th, 2010 1:24pm Eastern Time
Oil, United States Oil Fund LP (ETF) (NYSE:USO) is down sharply today as the dollar continues to be strong. Fear that Europe will kill the global recovery is also causing demand recalculation. Almost all commodity stocks are getting hammered but light may be at the end of the tunnel.
While many think the Euro will go to par against the dollar, I think a short term bounce is on the horizon and could start as soon as the next few days. Oil and other commodity stocks have fallen off a cliff and are due for a short term bounce. This is only a short term bounce of course, but could be an opportunity to keep the profits rolling.
Chevron Corporation (NYSE:CVX) is coming towards the 200 moving average at $75.00. This looks to be prime spot. Oil near $70 also looks to be solid for a short term bounce. AK Steel Holding Corporation (NYSE:AKS) is nearing its double bottom level from the big DOW 1000 point drop at $14.00. Southern Copper Corporation (NYSE:SCCO) is coming into a triple bottom on the daily chart at $26.40. Even Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) has great support at a triple bottom around $65.50 on the daily chart which will act as good support.
Bottom line is this, just looking at the United States Oil Fund (USO) chart, it is clear in the short term commodities have fallen too far too fast on this panic. Watch for an oversold short term bounce in my opinion.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
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