Someone asked for us to post what it was we saw in the Oil Services Sector (OSX) Index. With so many sectors being very extended on weak volume we watched the oil services sector. It had been consolidating and showed good accumulation during that time. So with the market advancing and looking overly extended we took the opportunity to get into a sector that was late to come out of the gate. And thus would still have the whole track to run, as opposed to the sectors that were topping out.

This chart is the $OSX and shows the tight trading range over the past month. And then recently it broke to the upside. This is how good technical analysis works, you have to stalk your trades and the sectors they are in. So while everyone was talking about a handful of stocks which have been raising the averages, we look for sectors going through accumulation and have not yet had a significant run. This is the case with the Oil Services sector. Additionally this sector benefits from the weak dollar and if you look at the $USD chart it rolled over at the same time this sector broke to the upside.

The sell off in the market this afternoon was very broad in nature and brought the majority of sectors down. On thing of note is that this sector stopped at support and rebounded a bit. But what happens now after today’s sell off remains to be seen. The large drop is a psychological awakening for the market and will give retail money a pause now. We are disappointed that today happened to be the day we entered our precisely chosen trade. But the signals have been printing for some time now… This sell off was due. Too bad it happened today. Now the discussion will be if it was as simple as profit taking, economics data, retails sales data from this morning, whispers on the street of other ‘bombshells’ coming, and on and on. Everyone has a spin. The chart today after this sell off signal more selling to come, the volume on this selling was very heavy. again, as has been the case since August 17th, volume on the way up has been weak, volume on the way down is strong. Give technical analysts (like us) a clue that retail money is building the market up and the smart money is selling it out from under them.