Robin Nixon, stop!

[Winetalk.com]

the next day after you posted on Oprano the rosy prediction,
oil and the rest of the markets just tanked!

[Nickatilynx]

the next day after you posted on Oprano the rosy prediction,
oil and the rest of the markets just tanked!

I told ya Robin that now you will have Serge on yr ass.

And not in a good way......

;-))

[MorganGrayson]

*pout*

I want to be on Robin's ass.

:o

Did I say that out loud????

:1run:

[Robin]

Hehehehe! Thanks Morgan!


Yeah Nick, Serge is definitely on my case now!

Anyway here's the story as I see it. Over 60% rise in three-four months for many energy stocks. At the first sign of potential problems many investors are selling out to protect their gains. So it's only a loss for someone who didn't get in over a month ago. There has been a 5-10% correction which includes a general stock sell-off following the news today that the US cost of imports is the highest since 1990 due to the cost of crude oil.

My view is that these energy stocks are now looking cheap. I sold off many of my positions and am now on the sidelines waiting for when I think the next upswing will start - as it certainly will, and quite soon. In fact, I suspect I saw a bottom tested today but it was not breached. Two more tests without breach and we are on up again.

I follow XLE VERY closely because it's a composite tracker stock of the energy market. What that does, most of energy is doing.

I should still point out that the S&P is now lower than at the year start. If you were invested in a regular S&P tracker you would have lost money this year.

If you were invested in XLE you would have made 50% this year (would have been 60% last week :)

True - energy will be very volatile but also very profitable. As long as you buy in just at the start of a rise and set a stop loss at the buy price so the most you can lose is your $10 trading fee you'll be pretty much OK.

So, right now I'm not doing much energy. I'm looking at railroads as they have a good future, though. Oh, and after Apple announcing the video iPod - I made a nice daytrading killing today :)

[Mike AI]

It could definately be a buying opportunity for the right stocks. But it will take a strong stomach.

[wig]

http://www.oprano.com/msgboard/showthread.php?t=41534

a low in October is likely and should lead to a 1-2 month rebound, but I do not think it is a buying opportunity beyond that. I doubt that we will see new highs and envision it rolling over after a bounce.

[Robin]

http://www.oprano.com/msgboard/showthread.php?t=41534

a low in October is likely and should lead to a 1-2 month rebound, but I do not think it is a buying opportunity beyond that. I doubt that we will see new highs and envision it rolling over after a bounce.

You could well be right.

A very curious thing happened this last week...

Up until then, whenever crude oil rose in price so did all the energy stocks. WHen it fell so did energy. But last week after crude fell from $65 to about $60.50 a barrel for an intraday low (see crude oil chart below)...


http://quotes.ino.com/chart/intraday.gif?s=NYMEX_CLX5&t=l&w=15&a=2&v=w

When oil started going back UP in price, energy stocks continued FALLING! And when crude oil started to FALL again energy stocks started RISING.

This is very interesting indeed. I think it marks a deliberate seperation of crude oil from energy stocks. There must be some big investment houses forcing this. Perhaps they think they can control the rise of crude this way. I am watching fascinated at the moment.

I cannot believe this can continue and at some point crude oil prices and energy stock prices will again parallel each other. So my current guess is that when the energy market finds a bottom it cannot push through (probably there will be three attempts), and we should know at the close today if we possibly hit the third one (see the oil sector chart below)...

http://quotes.ino.com/chart/intraday.gif?s=AMEX_XLE&t=l&w=15&a=2&v=w

... that when this happens it may start straightening out. But yes I agree there is probably a good run up in energy until the spring due. Then once winter fuel conmsumption is down the markets will reassess themselves.

Another problem I see is that when everyone gets into oil during the next run up the big boys will suddenly sell off at some point. That will need to be watched out for. It'll happen after one of the day's biggest rises ever I should think.

[Robin]

I'm getting cautiously optimistic for the markets today. Here's a chart of the S&P 500

http://data.moneycentral.msn.com/scripts/chrtsrv.dll?Symbol=SPY&C1=3&C2=&C5=10&C6=2005&C7=10&C8=2005&C9=0&CE=0&D3=0&D4=1&D5=0&E8=5&EFR=236&EFG=246&EFB=254&E1=0

I think we may have bottomed (for now)...

[wig]

I would not be surprised to see oil trade in the 40's in the not too distant future.

[wig]

I'm getting cautiously optimistic for the markets today. Here's a chart of the S&P 500

http://data.moneycentral.msn.com/scripts/chrtsrv.dll?Symbol=SPY&C1=3&C2=&C5=10&C6=2005&C7=10&C8=2005&C9=0&CE=0&D3=0&D4=1&D5=0&E8=5&EFR=236&EFG=246&EFB=254&E1=0

I think we may have bottomed (for now)...


A low in October would complete a nice web of cycles.

How high do you think it will go if we put in a bottom here into/before years end?

[Robin]

I would not be surprised to see oil trade in the 40's in the not too distant future.
Yes that could happen. But only briefly. The rest of the world is stepping up crude production because of the hurricanes. But our bottleneck is refining. Therefore there could be a glut of crude for a while. However, I think the low $50s is the lowest it could go - nobody would let it go any lower, the Saudis would slow production to keep it over that level.

Even so, crude is running out and if oil falls it will go back up for sure.

On the other hand. All it takes is for one of the big oil producing countries such as Saudi or Iran etc to produce less oil than they did the year before and everyone will start believing in Peak Oil and there'll be a run up on the price of crude.

[Robin]

A low in October would complete a nice web of cycles.

How high do you think it will go if we put in a bottom here into/before years end?

http://data.moneycentral.msn.com/scripts/chrtsrv.dll?Symbol=SPY&C1=1&C2=&C3=3&C4=3&C5=10&C6=2005&C7=10&C8=2005&C9=1&CE=0&D3=0&D4=1&D5=0&EFR=236&EFG=246&EFB=254&E1=0

Probably the S&P will make 130 by New Year, maybe 135 by spring, and then it may fall back and take a year to recover.

[wig]

Yes that could happen. But only briefly. The rest of the world is stepping up crude production because of the hurricanes. But our bottleneck is refining. Therefore there could be a glut of crude for a while. However, I think the low $50s is the lowest it could go - nobody would let it go any lower, the Saudis would slow production to keep it over that level.

Even so, crude is running out and if oil falls it will go back up for sure.

On the other hand. All it takes is for one of the big oil producing countries such as Saudi or Iran etc to produce less oil than they did the year before and everyone will start believing in Peak Oil and there'll be a run up on the price of crude.

I am not a fundamentalist, but I understand what you are saying. I am sure there are hypothetical rationales to support $40.

I am not trying to make a serious prediction on oil. Longer term it will take a lot to turn the picture bearish.

[wig]

http://data.moneycentral.msn.com/scripts/chrtsrv.dll?Symbol=SPY&C1=1&C2=&C3=3&C4=3&C5=10&C6=2005&C7=10&C8=2005&C9=1&CE=0&D3=0&D4=1&D5=0&EFR=236&EFG=246&EFB=254&E1=0

Probably the S&P will make 130 by New Year, maybe 135 by spring, and then it may fall back and take a year to recover.

I use futures as a vehicle, so I am not sure how that equates with SPY. The pattern in the chart above, albeit missing the starting low in 2002, is an organized advance.

Longer-term (next 1-3 years), I am leaning towards this being a terminating pattern of the advance from the 2002 low. If that is correct, first stop on this chart is a test of the 107 low.

I will be shorting any 1-2 month bounce off the October low (assuming it happens).