Its been a brutal affair in oil and one would expect any algorithm to have gotten shredded over the past 6 months. Truth be told, The PPT has been wrong on USO, the commodity itself, as new levels breached to the downside shocked and awed all correlations known to mankind. However, believe it now, it has nailed the OIH trade with sublime precision.
Here’s a look at the actual oversold signal for OIH, over the past 12 months. As you can see, it’s a little slow to respond; but after 5 trading days, things start to get real colorful (extra Macho Man).
As of yesterday, the OIH flagged oversold and is still in a state of oversold, which means the system is expecting a reflex rally over the next 10 trading days.
I added to my ECR position.