14Oct11:07 amEST

Firing Back with a Purpose

This morning seems like a good time to reiterate that oil stocks continue to be very much out of favor on The Street, and likely will continue to be for the foreseeable future regardless of what actually happens in the coming General Election.

Simply put, the AAPL AMZN NIO types of names will continue to capture the hearts and minds of most speculators for obvious reasons. Although it seems as though those glamorous stars will forever be bought on any micro-dips and keep making new highs the reality, if history is any sort of rough guide, is that long after they have topped out (it will not be obvious at first or even after a few months) is that there will be a new generation of perpetual dip-buyers who eventually learn the hard way that the market, despite The Fed's best efforts, is not a cute piggy bank which easily dispenses tens of thousands of dollars after bold TikTok options strategies are rewarded, but rather a savage beast looking to constantly bite your financial head off in the name of creating a somewhat efficient, liquid global market--At least that is how the reversion to normalcy usually materializes. 

In that respect, seeing the downtrodden and unpopular oil stocks fire back with a purpose this morning after yesterday's "Oh, man, here we go again!" bout of relative weakness to the market is a notable but likely overlooked aspect of this morning's price action. 

In front of heavyweight SLB's earnings on Friday, the OIH ETF for oil services is flashing a potential bullish inverse head and shoulders bottom, seen on the daily chart, below, The XLE XOP ETFs are also sporting similar patterns, as well. 

While it may not seem like a big deal, or perhaps even cherry-picking on my part, these sorts of snapbacks to weakness are a necessary component of forming a major, multi-year bear-to-bull reversal. 

Stock Market Recap 10/13/20 ... Stock Market Recap 10/14/20 ...

 
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