"Should you find yourself in a chronically leaky boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks." -Warren Buffett
I wrote a piece earlier for stockcharts.com discussing home bias, which is the tendency for people to own companies that are located close to their home. One of the ways I suggested to combat this bias was to make sure to screen for stocks across markets and regions. You never know where the next signal or attractive setup may come from. And by using a bigger funnel for ideas, you are more likely to have good ideas filter through.
Part of my normal routine is to review ETFs that are hitting 65-day highs and lows, as well as ETFs that have an RSI below 40. I include a wide spectrum of liquid ETFs, covering equity indexes, sectors, styles, cap ranges, global markets, currencies and commodities.
Energy sector ETFs are showing a bullish divergence
When I ran the "RSI oversold" screen today, I found a number of energy ETFs pop up. This reminds me of about a month ago when all the oil ETFs were oversold before rising quickly in the following weeks.
I noticed a bullish divergence from RSI on many of the charts, suggesting a slowing of downside momentum and potential upside in the near future. Charts below:
Source: stockcharts.com
Source: stockcharts.com
Source: stockcharts.com
Source: stockcharts.com
Of course, the Buffett quote at the top of this post is a reminder that when price is down, it's usually down for a reason! But conditions like these often lead to an upside bounce worth playing.
RR#6,
Dave
Disclaimer: This blog is for educational purposes only, and should not be construed as financial advice. Please see the Disclaimer page for full details.