$$ Weekly Energy Report

Jan 4-8, 2010
For annotated charts of $OIH, $UNG and $USO, please go here.

1. OIH

Price remains in the neutral zone. Price made a peak in mid-October, and has since drifted sideways down with lower highs and lower lows. Price remains above the trend line.

Momentum breached the RSI 38 uptrend floor in early December, and has since failed to exceed 62 on the upside. The 45-day average is hovering at 50.90, which is essentially neutral. As best shown on %B, there was a recent negative reversal where momentum made a higher high vs. mid-November, but price made a lower high. This has combined with the positive reversal trend line on price to produce a symmetrical triangle.

Volume: The Accumulation Distribution averages have turned negative.

Outlook: Wait for the triangle to resolve itself before making any move.

2. UNG

Price remains in the neutral zone and near the trend line.

Momentum has recently flirted with the RSI 62 boundary for downtrends, establishing a long term negative reversal (where momentum makes a higher high, but price makes a lower high). The 45-day average on RSI has climbed to 48.56 but is still bearish. Bullish divergence stemming from the early September low. If the bull divergence lines are broken to the downside, the downtrend could accelerate.

Volume: Heavy distribution picture, with the 3-day average bumping up against the 21-day average early last week. In a downtrend, this can provide an excellent shorting opportunity.

Outlook: Negative.

3. USO

Price is barely above the neutral zone and well above the old up trend line. Price looks to be peaking at a new down sloping trend line, forming a symmetrical triangle.

Momentum: RSI breached the 38 floor for up trends, dropping to 30 the second week of December. This created a positive reversal trend line on price vs. the low in late September. More recently, RSI seems to be stalling at 62, the ceiling for downtrends. In so doing, RSI is making a negative reversal compared to the mid-November high, which allows us to draw a down sloping trend line on price.

Volume: Recently, the 21-average has crossed below the 55-average. What had been a picture of accumulation now looks to be one of distribution.

Outlook: Consolidation until the symmetrical triangle resolves.