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February 04, 2007

Energy Insights
by Meridian

This week in Energy Central I continue to focus on what was said in President Bush's State of the Union Address. He specifically noted....

It's in our vital interest to diversify America's energy supply, and the way forward is through technology.

We must continue changing the way America generates electric power by even greater use of clean-coal technology; solar and wind energy; and clean, safe nuclear power.

In my files of writings I happened across an article on Uranium that I had penned some time ago. This week I present this article in its entirety for my subscribers. This article presents a solid, convincing argument for the advancement of nuclear power.

I expose the flaws in hydro-electric power generation. I introduce the shortcomings of wind power generation. I show how the opportunity cost of using hydrocarbons as a fuel to generate power in developing nations is simply too high. I offer some staggering data that knocks the wind out of any argument for an increased use of coal as a fuel source at generating plants. I then go on in this article to show readers how Uranium is processed into fuel for reactors and I take a mighty swing at those who continue to harp on the issue of nuclear safety and nuclear waste. All in all, a very compelling read and in fact a MUST read for any trader and investor who seriously follows the energy sector.

This week also saw a flurry of activity in the pipeline sector. It is no great secret that America is seeking to source more oil and gas from resource-rich Canada to the north. This of course will entail having to build additional pipeline capacity. This week I take a look at two of the big pipeline players in Canada and offer readers my technical charting analysis. I then pose the question - who exactly will build all of this large diameter pipeline? I introduce readers to two publicly traded entities that I have found. One is a tad pricey at over $100 per share. But it is looking good on the charts and even for trader using 100 shares as a position, there is money to be made. The other is a Texas based company that likewise is looking real nice on the charts. Price action is coiled into a wedge pattern and like the majority of such patterns - I expect this one too will resolve itself to the upside. I see the potential for a $10 move once the breakout from this wedge occurs.

Last week for my readers I took a close up look at the ethanol and bio-fuels movement and introduced several companies that I felt were good trading candidates. These included the likes of Andersen's, Sassol and Pacific Ethanol. This week for my subscribers I provide an update with some specific trading instructions. I see some interesting things happening. I think I will see the greatest action on Andersen's. A re-test of 2006 highs will mean a $17 move higher.

As for Crude Oil itself, I see some interesting things happening. We are definitely in the midst of the annual period of seasonal strength in the energy sector. Momentum is clearly strong on many of the larger cap energy equities that comprise the various ETF's that are out and about in the marketplace. But, yet we see Crude inventories remain stubbornly high. Over the past several weeks I have assembled a collection of large cap energy equities and so far so good. This collection is gaining in value. But I remain somewhat cautious to Crude Oil. The following is what I told readers this week:

Crude Oil Intermediate Term (weekly chart)

With respect to this long term weekly continuous chart, I have been advising caution. Oil inventories are above the 5 year historical data range which could prove detrimental to any sustainable rally even though we are in the period of seasonal strength in the Energy sector. Taking a closer look at this chart, we see the RSI is still not quite above 50. We see price action is still locked in an obvious downtrend channel. Price action has not taken out the 18 period moving average. And, DMI has not recorded a positive crossover. To get a serious rally going, I would need to see price action break out of this downtrending channel and hurdle the 18 period moving average. Watch carefully. We are at a critical inflection point here.

To explore how you can subscribe to Energy Central and keep fully abreast of trading opportunities in the energy sector, point your browser to www.themarkettraders.com and have a good look around the site. You'll be glad you did.

www.themarkettraders.com

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