Jeff Clark spies a diamond-buy in the midst of this selling rubble. 
We are approaching what I believe may be the best oil-stock buying opportunity of the year.
I know that sounds ridiculous. After all, the American Stock Exchange Oil Index is down 15% on the year. And Big Oil companies like ExxonMobil, Chevron, and ConocoPhillips are down 15% as well.
The price of oil, though, is 50% higher today than it was when it started 2009. So, what is the problem with related oil stocks?
Frankly, I don't know.
I wish I could tell you the oil stocks outperformed crude oil late last year and the sector rallied ahead of the commodity. But it didn't. Oil stocks bottomed with the overall stock market back in March.
Since then, the gains have been modest at best. At worst, they've vastly underperformed the remarkable rally in the price of crude oil itself. But I believe that's about to change. My No. 1 oil stock indicator could be about to turn bullish. Take a look...
The Bullish Percent Index measures overbought and oversold conditions. The index ranges from 1 to 100. Any reading below 10 indicates the sector is oversold and investors should prepare for a rally. A reading above 70 indicates the sector is overbought and may be ready to decline.
You can see how this chart matches up against the performance of the AMEX Oil Stock Index...
The blue circles indicate Bullish Percent Index buy signals. Each one preceded a rally of more than 20%.
Recently, oil stocks peaked in early June and have been trending lower ever since. But they look to me to be rapidly approaching the oversold level.
As soon as the Bullish Percent Index drops below 10, traders may want to consider being ready to buy the oil stocks. It may be the best opportunity to profit off the sector this year.
Best regards and good trading,
Jeff Clark
Growth Stock Wire
Editor's note: Veteran trader Jeff Clark is author of Growth Stock Wire, a daily read providing investors with a pre-market briefing on opportunities in the global stock, currency, and commodity markets. Click here for more information… and a free report on the best ways to trade options.
Read Jeff's previous posts: Here’s What a Sell Looks Like. and Never chase a rally!
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