Well, to state the obvious, a lack of follow through ain’t bullish…
After virtually giving buy signals across the board yesterday (see ERX post below), the energy sector virtually got hit with more waves of selling today. Given that energy was a leading sector on the market’s rebound from the September lows, there is a big chance the entire market has more downside ahead.
Of those stocks in the sector I follow, the weakest remain: BHI, BP, RIG, SLB, XOM, EOG, NBR, and NOV. To my mind these are all shorting candidates but it must be noted that the general market is oversold and could push them up again like yesterday.
A bet on the short side here is a bet that both the market and the sector will continue to be bearish.
(click on image for a larger view)