Are Energy Stocks Flashing a Buy Signal?

Oil-and-gas stocks once again reached selling climaxes last week

Aug 10, 2015 at 1:45 PM
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Last week, Schaeffer's Quantitative Analyst Chris Prybal took a look at selling climaxes. These weekly signals occur when a 52-week low is hit during a week, but the stock actually ends the week above its prior week's close. Prybal noted that selling climaxes can sometimes present contrarian buying signals.

Having said that, below is a list of stocks and other equities that reached selling climaxes last week. As you can see, the energy sector was once again well-represented -- among which was Transocean LTD (NYSE:RIG), a recent favorite among option traders. (Of course, extreme selling among oil-and-gas names is hardly surprising, given crude's prolonged sell-off.) In any case, RIG hit an intraweek (and 20-year) low of $12.07 on Wednesday, before closing the week at $13.57 -- above the prior Friday's settlement price of $13.26. Today, the shares are up 5.6% at $14.33, after Jefferies upped its outlook to "hold" from "underperform" and its price target to $13 from $12.


Also reaching selling climaxes were a number of CBOE Volatility Index (VIX) products. As Schaeffer's contributor Adam Warner touched upon earlier, the iPath S&P 500 VIX Short-Term Futures ETN (VXX) panned a record low on Wednesday, but took a sharp bounce to end on a weekly gain. Other VIX products on the selling climax list were the ProShares Trust Ultra VIX Short-Term Futures ETF (NYSEARCA:UVXY) and the ProShares Trust II (NYSEARCA:VIXY).


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