For the better part of the past two weeks I have been largely in cash.  I have taken a few small long side risks, but not much to speak of. The big sell off in oil was a major headwind for E&Ps in recent weeks and there was no sense fighting it.

But now I'm seeing a lot of promising technical long setups in energy names starting to pop up.  Most every opportunity I see right now is a positive RSI divergence with a V-bottom in the ADX.

Here's an example...

Apache (APA) has made a lower low over the past few days while the RSI at the top of the chart has not. This signifies downward momentum coming to a close.  The red lines in the chart above show the divergance.

Also notice the ADX is above the red -DI line (green circle).  This means the recent downward trend is overextended and likely reverse course in the near future.

I have not established a position in APA yet but I will let you know via Twitter when I do.

With oil near $85 a barrel I feel much more comfortable taking long side risk in oil names.  More stocks with this same setup are GPOR, OXY, and OAS.

UPDATE June 10: I added a position in APA on Thursday and Friday. My average buy price is $83.50.




Disclosure:  I am long GPOR and APA