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OPPORTUNITY IN OILS

from ChartWorks:: published by Institutional Advisors

Bob Hoye
Technical observations of RossClark@shaw.ca
October 8th, 2005

The seasonal pattern for crude oil called for a rally from early in July, ending in the second half of September through the first week of October. This year was no exception. A correction is now likely. Major support rests at the 50-week moving average (currently $54.13 and rising at 20 cents per week). In the oil stocks we have seen the seasonal corrective phase in the fourth calendar quarter offer trading opportunities in 10 of the past 12 years.

The following chart of Suncor (SU.TO) shows that the decline in the stock price is typically in the 14% to 19% range from the seasonal high. For this year this calculation provides a targeted support at $59.30 to $63.00 with an outside possibility of $55.00. Historically, the break also coincides with a decline in the weekly RSI(14) reading of 24, +/-4 points. The targeted low for the weekly RSI(14) will be 55 +/- 4 points.

On a more refined daily basis, the following charts show that the first break in the RSI(14) below 40 after the 15th of October has provided excellent buying opportunities. Rallies out of the low have produced consistent upside price action. By the first week of the next year the rallies from the low have been 13%, 12%, 11%, 28%, 15%, 4%, 20%, 31%, 24%, 15% and 11%.

Bob Hoye
October 8th, 2005

EMAIL:: bobhoye@institutionaladvisors.com
CHARTWORKS WEBSITE:: www.institutionaladvisors.com

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