$$ Weekly Energy Report

Jan 11-15, 2010
For annotated charts of $OIH, $UNG and $USO, please go here.

1. OIH

Price broke out of both the neutral zone and the symmetrical triangle consolidation pattern to finish the week up $13.92 at $132.82, slightly above the outer Keltner Channel (50,4,25). Price made new 15-month high and remains well above the trend line (~$115).

Momentum exceeded the RSI 62 level to the upside, confirming the uptrend and closing at a 20 month momentum peak of 74.51. We'll be watching for any bearish divergence to develop from this momentum peak forward.

Volume: Strong short term accumulation last week.

Volatility: Std Deviation crossed its 125-day moving average and ADX has expanded from 13 to 22 in the last week. We saw the squeeze play work perfectly as price broke out of its consolidation pattern to gain nearly 12% last week.

Last Week's Outlook: Wait for the triangle to resolve itself before making any move.

Next Week's Outlook: Now that OIH has broken out to the upside, the question becomes when to take profits. Watch for bearish divergence between price and momentum when price is at or near the outer Keltner Channel.

2. UNG

Price closed up $0.33 for the week at $10.41, but remains in the Keltner (50,1,25) neutral zone. Price has consolidated in a range of $9.94 to $10.96 over the last 17 trading days.

Momentum recently flirted with the RSI 62 boundary for downtrends, and the ceiling held which is bearish. The 45-day average on RSI has climbed to 49.89 which is essentially neutral. Recently, price made a double top between Dec. 28 and Jan. 6, but both RSI and %B made lower highs on Jan. 6 vs. Dec. 28. This is usually bearish. Finally, there is bullish divergence stemming from the early September low. If the bull divergence lines are broken to the downside on RSI, the downtrend could accelerate.

Volume: Heavy distribution picture.

Volatility: Std Deviation is approaching its bottom Bollinger Band (125, 1.5) while ADX crossed below 20 making a 2-month low. We could be entering squeeze play territory.

Last Week's Outlook: Negative.

Next Week's Outlook: UNG looks to be consolidating in a range with declining volatility. Be on the alert for a break out. Given the overall picture, any potential break out is likely to be downwards.

3. USO

Price closed up $1.65 for the week at $40.93. Price is currently halfway between the neutral zone and the outer Keltner Channel (50,4,25). Price is well above the current trend line (~$36), and just 53 cents away from making a 13-month high.

Momentum: RSI broke through the 62 ceiling for downtrends last week, closing at 67.95 and confirming the up trend.

Volume: Heavy short term accumulation picture.

Volatility: Std Deviation finished the week well above its 125-day average, while ADX climbed above 20 last week for the first time in 2 months. No squeeze play, but there is no indication that the volatility explosion is over.

Last Week's Outlook: Consolidation until the symmetrical triangle resolves.

Next Week's Outlook: With resolution to the upside, we'll see if USO can now push past the $41.50 barrier which has held for 13 months.