The Oil Services Index (OSX) has been one of the weakest sectors in the market and it’s unclear that the stocks are ready to embark on a sustainable rebound. While the sector is oversold, the OSX looks like it has more work to do on the downside before an "investable" bounce can occur.
While the weekly chart of the OSX is oversold according to the stochastic…
…the index is giving off more mixed signals from the DeMark indicators. The OSX broken down from a descending triangle formation, indicating that this correction has further to go on the downside. A measurement of the triangle indicates a move to 155 isn’t out of the question. In addition, the DeMark Sequential indicator is on 6 of 13 countdown reading, which also signals the index isn’t yet near a strong buying point…
Likewise, crude oil is also still only on a 6 of 13 countdown signal on the DeMark Sequential (TM).
So while the oil stocks could experience an oversold bounce, the overall technical picture still looks negative.
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