May 8, 2009 (FinancialWire) Dr. Joe Duarte , recently noted: The U.S. Oil Fund (NYSE: USO) and Oil Service HOLDRS Trust (NYSE: OIH) are not quite in sync, raising questions about whats next for oil prices.
Duarte added: Crude oil looks headed for $60 in the near term, as U.S. gasoline supplies have begun to shrink. This is both a function of decreased production and rising demand. In other words, it looks as if the inflection point in supply and demand has been reached.
Thats good if your bullish on oil, which we are. The next question is where you put your money.
In terms of ETFs, the charts are pointing toward the oil service sector (OIH) instead of crude (USO) for now. And that makes sense, as the stocks tend to lead the commodity higher at this early turn in the cycle.
Much of this, with USO, has to do with the way the fund is run, where they replace futures contracts on a monthly basis, and the funds Net Asset Value changes as a result. Still, thats a lot of inside baseball that is only part of the story.
Duartes conclusion: Charts rule and other stuff drools, which means that at this point OIH gets the nod, as its clearly attracting more money than USO. When that changes, well adjust accordingly.
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Duartes IntelligentForecasts.com (visitors health insurance) provides free news coverage and analysis, and his daily articles and news summaries offer recommendations and analysis for ETFs, and individual stocks in the technology, health and biotechnology, and energy sectors. Duarte has combined expertise in health care, energy, and the effects of politics and global intelligence on the financial markets offer a unique blend of insight and information to thousands of active investors and political and intelligence aficionados around the world on a daily basis.
He is the author of: Futures And Options For Dummies, Successful Energy Sector Investing, Successful Biotech Investing and co-author of After-Hours Trading Made Easy. In early 2001, in Successful Energy Sector Investing, he correctly predicted that Venezuelas political problems could lead to an energy crisis in the United States. He has also appeared as a weekly guest on Market Mavens Radio and has logged appearances on KNX radio in Los Angeles, Financial Sense.com radio, and Wall Street Radio.
One of CNBCs original Market Mavens, Dr. Duarte has been writing about the financial markets since 1990. His articles and commentary have been featured on CBS Marketwatch, Barrons, Smart Money, Medical Economics, and in Technical Analysis of Stocks and Commodities magazines. In 2003, Doctor Duarte received second place, in the professional section, of the Medical Economics Investment Challenge with a 12-month return of 42%.
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