Does anyone know if there was any rational or even semi-logical reason why OIH rallied so strongly yesterday? I can't figure out what drives this index.
The bombing in Jordan-I think that's where it was- is probably the reason. Based on the fact that this is a oil related index, it's probably a safe bet that anytime something bad goes down in the middle/far east, oil prices will rally bringing this index with it. I'm not positive that was the reason, cuz technically it looks like it is coming off a double bottom and is going to test the longer term resistance, but if you're going to trade this thing, I would also recommend watching the larger political picture. Vega
Interesting theory. Intution (which is worth nothing) tells me this should be a slow moving, steady index. But in actuality it gets these huge supply/demand spikes that I can't figure out...
Two other reports to watch out for are the weekly oil reserves report after the market close on Tue and the natural gas report just after lunch (2pm EST?) on Wed. Pls verify - I've forgotten the exact times. These two reports can really move the oil service stocks around as well, sometimes similar to what the Fed rate announcements can do to the market as a whole. I used to trade the oil stocks. They are hard to read sometimes and they often do not move with the overall market (sometimes counter even) so you get no help from the common market indicators such as PREM, TRIN, etc. Also, sometimes useful to watch the near-term crude and n/gas futures, if you can get 'em real-time. Can help identify when something's happening. Take it for what it's worth from a wannabe trader..
OIH took off on the back of nat gas futs ramp when the DOE & API info was released at 10:30 am. I was long at 56.10 on the futs impulse move and exited at 56.23 for a whopping .13 profit, thus leaving a little bit on the table (doh!). The DOE & API release inventory info on crude oil every Wednesday at 10:30 am and nat gas every Thursday at 10:30 am.
IS there any resource about learning how to trade this sector? I was watching on wednesday when a huge surplus came out, normally this is bearish but the market jumped up and it really confused me.
I was just reading an online article how this API/DOE report day can be very "irrational". (It was specifically about 5/21/03.) Was their any solid justification for this ramp up or is just a day to beware because it breeds a feeding frenzy? To a newbie, it looks as if everyone involved in the oil mkts is on steroids or meth on (what I assume are) these reporting days (5/21, 6/11, 7/18, 8/7)...