Energy ETFs Soar Into Overbought Territory

Below we highlight our trading range charts of four ETFs that track oil and gas stocks. The red area represents between one and two standard deviations above the ETF's 50-day moving average. When the price moves above the red zone, extreme overbought levels are reached, and the risk/reward trade-off shifts to the risk side. As shown in the charts below, the prices of these ETFs have turned parabolic in recent days as oil has shot to $120/barrel. For those that own and have gains in these ETFs, it would be greedy to not take some profits here.

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Comments

[paultaut]

Yes, they are overbought and yes they are due for a correction...I use Bollinger Bands myself and MACD but when there is an upside push like this one, you have to make sure you are going to be able to get back in below the price you sold. Overbought conditions can get more overbought.

[BigOilMan]

These oil service companies are seriously overbought and overhyped. I highly recommend taking profits before we get back to $170 in the next week or two.