Are oil stocks running out of fuel?

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Are oil stocks running out of fuel? technical analysis trends targets oil sector
With a bunch of oil producers making a recent run for glory, it's probably worthwhile looking at the sector index, the sexily named FTSE:NMX0530. Thankfully, the index tends to explain why a few oilers' recent price rises feel like they are running out of fuel.

As always, it's a blue line causing trouble, and currently this is pencilled in at roughly 8,642.354 points. The index is currently trading around 8,531 points and needs to close above 'blue' to signal further happy days ahead for the oil sector.

Such an event will suggest coming growth toward 9,132 points initially, with secondary at 10,523 points. Of course, this level of largesse is rather likely to be quite kind to many sector constituents.

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For now, we suspect some stutters can be expected and, obviously, this will tend to affect members of the sector which have recently approached - or bettered - many initial big picture targets.

BP (BP.), for instance, has mildly bettered our 515p, whereas Tullow Oil (TLW) still is sneaking up on our 356p. As for Sirius Petroleum (SRSP), goodness knows!

The growth cycle the oil sector has experienced since the start of 2016 currently suggests NMX0530 needs to drip below 7,680 points. About the only sensible early warning of trouble will be weakness below this level, as it permits an initial 7,350 points with secondary a more painful 6,890.

The more important detail for the oil marketplace would be reversal such as this trashing many sector members' growth potentials.

Tomorrow, we'll take another look at the price of Brent crude from a "big picture" perspective.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.