It is time to look beyond the despair to what might actually work in the fourth quarter. Beyond today's weak prices for oil and gas, there is a future where supply and demand are in better balance. Looking through scores of energy names, we culled out three more that are early turnaround candidates on the charts.
Halliburton (HAL) has been cut in half as oil prices have tumbled (see the chart above). Prices are back down to the last cycle low from 2012. HAL is testing the top end of a $37 to $25 support area. Also note the two bullish divergences: a higher low from the momentum indicator and a higher low from the stochastic indicator vs. the lower prices for HAL.
Total SA (TOT) is another energy name that has been pounded, not into the ground, but back to the lows of 2011 and 2012 (chart above). Is that depressing? Sure, but notice the bullish divergence again: lower lows in prices but higher lows from the momentum indicator and the stochastic indicator. The rate of decline slowed on the last decline. Slowing momentum tends to precede price reversals.
Canadian Oil Sands (COS), which trades on the Toronto Stock Exchange and over-the-counter (COSWF) is also attempting a turnaround. The COS price chart looks ugly, but notice the bullish divergence again. Prices made new lows, but the momentum study made a higher low, a sign that prices could turn higher. The stochastic indicator made a higher low (less oversold) also foreshadowing a potential price turnaround.
Aggressive traders could begin probing the long side while conservative investors could wait for a moving average crossover to enter the long side.
