How the oil sector can avoid this Black Hole
Oil shares are a major driver of indices, so investors must take notice when this sector index moves.
17th October 2019 09:30
by Alistair Strang from Trends and Targets
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Oil shares are a major driver of indices, so investors must take notice when this sector index moves.
Triggers are always interesting. We had our own little "trigger" incident today with the UK Oil & Gas Sector, the NMX0530!
Last time we covered it in August, we'd warned the dangers if 8,214 points broke. In the couple of months since, the index has assiduously avoided the trigger level, almost teasing us with the care taken to ensure 8,214 points didn't actually break.
To us, it tends to confirm we've been working against the correct trend and calculating properly. Unfortunately, for the index, it tends mean if we were correct about 8,214, we'll invariably be correct about the reversal potentials.
The reason for our concern about this sector is fairly obvious. Oil & Gas shares are major drivers for the main index and, also, through the AIM, attractive to many private investors.
As a result, we'd suggest keeping a weather eye on the NMX0530 before decided any oil share is actually cheap. The immediate situation is straightforward as weakness now below 8,195 looks like entering a cycle down to 7,998 points next.
Visually, there is ample reason to expect some sort of rebound at such a level but, if it breaks on the initial surge downhill, our secondary calculates at 7,746 points.
From a really big picture perspective, if our secondary fails to promote a reasonable rebound, the index risks losing a further 1,500 points as it could trend down to a bottom (hopefully) at 6,230 points.
To escape this potential Black Hole, the index requires above 8,570 points as this calculates with the potential of recovery to 8,854 points. This "risks" being game changing, thanks to our secondary above 8,854 coming in at 9,403 points and safety (apparently) for the future.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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