Gold-Oil Ratio Says Oil Is A Screaming Buy

by Olivier on February 11, 2009

Got stopped out of UCO today. I am not exactly thrilled as my goal is to find levels I can put in a stop loss where odds I get stopped out are rather low. It would be foolish though to expect every single trade to work out. That said there will be more opportunities ahead. The gold-oil ratio chart is saying that oil is a screaming buy. Keep a close eye on it. You can access the chart on my public list. It is impossible to predict the exact low for oil. But I expect prices to reverse at some point in time. That’s the reason I was and still am willing to try that long oil trade.

A few thoughts on gold: In the short term I expect gold prices to struggle with that fan line displayed on my GLD chart on my public list. Long term I expect gold and silver prices to go much higher. I am closely monitoring GG’s volume pattern and RGLD’s flag building process for clues. RGLD in my opinion is the perfect indicator. It is the leading stock because it is practically the only one trading near its all time high.

A few thoughts on those stem cell plays: They obviously need more time before they can break out of their bullish patterns. This stuff is risky. Biotech stocks are inherently risky. An additional risk is the market needs to somewhat cooperate. I am willing to bet money on GERN for several reasons though:

Biotech is outperforming the market.
Stem cell stocks are the leading stocks within the sector.
GERN is the leader within that specific sector.
I expect the markets to stage some kind of counter trend move before the dreaded sell in May and go away time frame is reached.

That’s it for tonight. Have a great evening.

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