March 7th, 2007

Oil & Gas Stocks are returning: SLB, NOV, VLO and more

Looks like it may be time to get back into some Oil & Gas stocks. Some of the names that were big from 2004 to the middle of 2006 seem to have been in hibernation for the past 6-9 months. Many of these past leaders are at the tail end of making some classic and easily visible consolidation patterns, whether pennants or horizontal channels. And it looks that with the approach of another driving season followed by possibly another hurricane season (we were saved last fall by an unexpectedly low hurricane count) these stocks are going to make another move up.

I feel very conflicted about making this sort of prediction because I, like most other adults in this country, drive and buy gas. I also buy oil to heat my house. So, as a consumer, I don’t like higher oil prices. But as an investor, I can’t help but hedge my oil consumption by investing in energy stocks. (I also feel less guilty about spending $1.85 for a Starbucks Grande half-caff or spending $45 for the wife and I to eat at Cheesecake Factory if we also own the stock).

Oil & Gas-Machinery/Equipment, Oil & Gas-Refining and Oil & Gas-Field Services are three groups that have, as of last Friday, jumped more than 50 places in ranking over the prior 4 weeks.

Take a look at these charts and see whether they don’t look like their building up a head of steam for moving forward again:

Schlumberger (SLB):

National Oilwell Varco (NOV):

Valero (VOL):

But many more look like they’re setting up for the next leg up. Check out they’re charts by clicking below.

Oil & Gas-Machinery/Equipment:

  • BTJ
  • SII
  • TESOF
  • WFT
  • FTI-
  • CAM
  • LSS
  • DRQ
  • LUFK

Oil & Gas-Refining

  • FTO
  • SUN
  • HOC

Oil & Gas-Oil Field Services

  • DWSN
  • OII
  • OMNI
  • WG
  • BRS
  • INT-
  • RES

Remember, this is an alert. These stocks will be more ready for purchase in a month or two than now.

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