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Oversold Readings For Oil And Commodities Finally Trigger A Buy Rally – Mike Swanson (08/24/2021)

Yesterday, the stock market had a nice day up, but more importantly oil and commodities put on strong rallies across the board. Energy stocks had been among the hottest sectors in the markets for the first six months of the year and then went into a correction in June. The price of oil also peaked out and fell down towards its 200-day moving average, as you can see from this chart.

Oil rallied for over 5% yesterday and many energy stocks went up even more. The price of gold also had a strong day and managed to close above $1,800. It’s next resistance point is in the $1840 area, which was the high of last month, but as you can from this chart the action now is very similar to what took place in early May, which I circled below.

This month gold took a tumble and successfully retested its spring lows to form a triple bottom. Now may be the time to buy mining stocks if you still do not have a position in them or the GDX gold ETF, which I do have in my retirement account.

For individual stocks that I own that look like they are in good position check out these two:

One could buy XOM and put a stop under its 200-day moving average. It’s paying a 6.4% dividend.

As for mining stocks take a look at WPM, because it has held up like a rock during this recent decline in gold and silver, as you can see from the relative strength ratio at the bottom of this chart.

Of course, the best small cap stocks tend to go up more than big caps. If you haven’t done so yet, now is the time to read up on and consider my top stock pick for this month. Here is my first post on it here.

-Mike

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