Energy stocks usually rally at this time of year. Yet, the Oil Service HOLDRS Trust (NYSE: OIH) is still well below its 52-week highs.



Chart Courtesy of StockCharts.com

Cold weather usually leads to a rally throughout the energy sector. Yet, this year's arctic blast has barely led to a bounce in the OIH. That suggests that economic expectations remain subdued.

Oil service stocks are usually in the midst of any energy rally. That's because these are the companies that keep the industry running. They build, manage, and often maintain and repair oil and natural gas rigs. But if demand for oil and gas are slow, due to a slower global economy, then oil service revenues and earnings are likely to suffer.

Oil prices have been cut more than 50% from their peak of 18 months ago, and don't seem to be boucing too aggressively, with the $70 area seeming to be the focal point at this time.

OIH is also well off its highs and delivering a feeble bounce, despite the potential for some mergers and acquisitions in energy rising.

What OIH is saying, barring some kind of sudden change, is that the safe bet right now is that oil prices, due to decreased demand, are likely to stay in the current price range for some time.

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