Wednesday, August 12, 2015

Are We Near A Bottom In the Oil Services Sector ETF $OIH

Market Vectors Oil Services ETF (OIH) — Just the mention of oil and oil-related stocks is enough to have investors tuning out these days. With the renewed slide in crude, which is down about 30% since mid-June, sentiment has gotten exceedingly negative again. For the contrarian, this begs the question, when is it time to buy an ETF like OIH for an oversold bounce?
The market’s major focus all year has been the timing of an interest rate hike by the Federal Reserve. Currently, the consensus is for a rate increase in September, which many fear will cause a widespread sell-off in stocks. But the consensus is rarely right about the market, which is why the contrarian in me thinks a September rate hike could result in the following scenario: stocks up, U.S. dollar down and commodities up. And while I doubt this will be the definite bottom for oil and oil-related stocks, it could lead to a powerful bounce.
Looking at the weekly chart of OIH, we see the ETF recently found its big picture support line. While momentum, per the RSI indicator shown at the bottom of the chart, made a low in December, OIH continued to drop, resulting in a significant positive divergence between momentum and price. While this alone is not a reason to buy an asset, it is something to be aware of and watch out for further confirmation of this potential bullish signal.

"Chart of the Day" - Dermira $DERM

The Chart of the Day belongs to Dermira (DERM).  I found the dermatology products stock by using Barchart to sort today's All Time High list for the stocks with the highest Weighted Alpha then sorted for the stocks with at least an 80% or better technical buying signals.  I then used the Flipchart feature to review the Charts.  Since the Trend Spotter signaled a buy on 6/1 the stock gained 73.87%.

Dermira, Inc. is a specialty biopharmaceutical company. It is focused on bringing medical dermatology products to dermatologists and their patients. The Company markets topical small molecule therapeutics that target acne, sebaceous gland hyperactivity, and inflammatory skin diseases. Its late-stage product candidates comprise Cimzia which has completed Phase II clinical trials for the treatment of moderate-to-severe plaque psoriasis; DRM04 that is in a Phase IIb clinical trial for the treatment of hyperhidrosis or excessive sweating; and DRM01 which has completed a Phase IIa clinical trial for the treatment of acne. Dermira, Inc. is headquartered in Redwood City, California.

Technical indicators:

  • 100.90+ Weighted Alpha 
  • Trend Spotter buy signal
  • Above its 20, 50 and 100 day moving averages
  • 9 new highs and up 48.30% in the last month
  • Relative Strength Index 78.83%
  • Barchart computes a technical support level at 23.69
  • Recently traded at 26.90 with a 50 day moving average of 19.28
Fundamental factors:
  • Market Cap $661.74 million
  • New so not closely followed
  • Has had 2 great earnings surprises
  • Earnings estimated to increase 35.90% this year ad an additional 10.70% next year
  • Wall Street analysts issued 2 strong buy and another buy recommendation
  • Only 1 individual investor on Motley Fool follows the stock and they have an Outperform opinion

The Next Silver Bull May Have Already Begun

Silver is down 7.1% this year. Will this weakness persist? To find out, let’s look at the key factors in the silver market this year.
Like gold, silver fell as the US dollar rose on the back of expectations that the Fed will hike rates.
World demand for physical silver fell 4% in 2014, largely due to a record 19.5% drop in investment demand.  (more)

Meritage Homes Corp (NYSE: MTH)

Meritage Homes Corporation designs and builds single-family detached homes in Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee in the United States. The company operates through two segments, Homebuilding and Financial Services. It acquires and develops land; constructs, markets, and sells homes; and provides warranty and customer services. The company provides a range of homes for various homebuyers, including first-time, move-up, active adult, and luxury under the Meritage Homes, Phillips Builders, Legendary Communities, and Monterey Homes brands. It also offers title insurance and closing/settlement services for its homebuyers.
Take a look at the 1-year chart of Meritage (NYSE: MTH) below with the added notations:
MTH rallied strongly off of its $32, January low making its way all the way up to a $50 high in April. In addition, over the entire course of the past year the $42 price level (blue) has become very important to the stock. Not only was $42 a key resistance back in August, but that level has also been an important support since the end of February.

The Tale of the Tape: MTH has a key level at $42. A trader could enter a long position on at $42 with a stop placed under the level. However, if traders are bearish on MTH, a short trade could be made instead on a break below $42.

The bottom is in for gold: Dennis Gartman

Dennis Gartman, The Gartman Letter, provides perspective to whether the worst is over for gold and how to trade it.