Since oil became a serious business in the 19th century, petroleum busts have always followed petroleum booms, and vice versa. In tough times, people in the oil patch trot out the old joke that “to make a small fortune in oil and gas, you have to begin with a large fortune.”

In recent years, petroleum investors and producers created smaller fortunes from larger ones. The process began in 2008, when natural gas prices collapsed, while West Texas Intermediate oil prices jumped over the jaw-dropping hundred-dollar-per barrel mark again – and stayed there until late 2014, when the most recent bust began. The chart illustrates that oil prices hit rock bottom last February. Now, the turnaround is well on its way. Of particular interest, in the last two years of this chart you can see a well-formed inverted head-and-shoulders pattern. As you probably know, that pattern is extremely bullish.

A week or so ago one of my columns said oil prices were on the rise, and suggested some ways to play the turnaround. This generated flak from a good friend of mine, who’s also a successful oilman. His name is Bob, and to him I dedicate this commentary.

As I mentioned once before, the oil and gas service sector is a good play at the beginning of a turnaround, since these companies respond quickly to increased activity in the oil patch. At the time, I mentioned Nabors, which continues to do well. Another is Halliburton (HAL), which offers oilfield services and products to upstream oil and gas customers worldwide. You will notice a tentative breakout, at the end of a cup and handle formation.

It is also possible to buy units in Barclay's Bank Oil ETN. These ETNs provide exposure to the S&P’s crude oil index. As Barclays explains, they are not secured, so there is risk here. To scare the Dickens out of you, they stress this point: “An investment in [ETNs] involves significant risks, including possible loss of principal, and may not be suitable for all investors.” Consider yourself warned. Now, please take a look at the chart below.

As you can see, per unit prices bottomed last February, then rose smartly until Jun, when they began to slide again. We got higher lows in August and September, and prices are now hovering around the red-green support-resistance line.

Of particular importance, please note the “golden cross,” which I marked with a green X. This cross, which is quite bullish, occurs when the 50-day moving average moves up through the 200-day average. The last time one occurred for this ETN was in early 2013, when these units were selling for more than US$20 each, and WTI oil was more than US$100.

The only worry I see in this chart is a probably short-lived sell signal in the PPO, which I have circled.