Deflation may be the talk of the day but the energy sector has quietly moved to important resistance levels. It seems China is behind this with rising oil imports, filling their strategic oil reserve, and upcoming nuclear power projects.

Regards - VHF

-

U.S. oil service stocks continue to outperform the S&P 500 Index despite a recent stall in the uptrend in crude oil prices. Oil Service HOLDRs are testing resistance at 87.71. ‘Tis the season for oil service stocks to move higher from the end of November to the end of May! Selected stocks in the sector are breaking above their recent trading range and completing bullish reversal patterns (e.g. Diamond International)

-

Strongest sector on the TMX yesterday was the uranium sector (with the exception of Cameco). Several TSX Composite stocks in the sector rose 8% or more (Denison, Mega Uranium, Pinetree Capital). Uranium Participation Units gained 2.7%. Units have formed a potential bullish triangle pattern that turns positive on a move above $7.00.

-

Strength was triggered by a small, but potentially significant reversal in the spot price of uranium oxide. Although the $0.50 U.S. per lb. increase was small, it represented the first uptick in the spot price in five months.