Crude Oil - Long Term
Well we have arrived...at support that is. If nothing else, this week served as a prime example of the 2 emotions that govern the world of investing - fear and greed. Fear was the emotion in the spotlight this week as investors holding energy stocks fled towards the exits and media columnists moved to take positions either in the bear camp or the bull camp. Some in the media are now calling for sustained higher prices while some are supporting a grim scenario where Oil plummets to $40. As for me... well I just went golfing and tried to put the whole thing out of my mind. I have decided not to beat myself up. I will not succumb to the fear being exhibited by the masses out there. I will focus on the positive. Namely,
We have tested the long term up- trend before, late in 2004 and a couple times in 2005. Each time we held the trend and worked higher in price.
Despite this sell-off, we still have the DMI indicating positive momentum.
Nothing in the past month or two has materially altered the supply /demand situation in the world of energy. China continues to consume, India's thirst grows and North America continues to consume like never before. Iran remains a powder-keg, leftist wing-nut dictators in places like Venezuela are not going away soon and reservoir decline rates around the globe continue to be a murky issue. In other words the energy issue is as fragile as ever.
If there is one bit of advice, it is to be careful for the next while in the equity markets. We are going through what is historically one of the most volatile times of the year on the markets and we are also currently navigating through the 4 year cycle low on the markets. Things will turn around. Don't lose hope. When they turn, be ready to spring into action.
Natural Gas - Long Term
And the Struggle Continues...
More pressure this week as inventories continued to build. At the risk of sounding like a broken record, all I can say is what I said last week and the week before and the week before. That is..." I just plain do not like it when a long term trend line is broken. I see some turbulent times ahead for energy firms with a weighting towards Natural Gas. If our multi-year trend is to continue, we have to get back above the uptrend line that extends back to 2002. Be careful if you are holding energy stocks with a weighting towards Natural Gas..."
Crude Oil - Intermediate Term
A Closer Look at Support
The above chart is simply a continuation of what I presented last week. I think we are making a "c" wave down in a complex Elliott Wave pattern. We are at support (see Long Term comments above) and we are grossly oversold. Be careful in the equity markets right now. If trading, be like Jack of nursery rhyme fame and fortune - nimble and quick. Any slip ups as you try to jump over the candle stick can burn you.
I do however see a faint flicker of hope. Friday we posted a Doji Bar candlestick formation. This normally signals that we have reached a turning point. Next week will tell the tale. Watch carefully.
Natural Gas - Intermediate Term
Falling Out of Bed with a Loud Thud !!
Inventory numbers were released this week. Like someone having a bad dream, Natural Gas fell right out of bed. What was a chart with potential to turn and make a bottom has turned into a chart that is just plain butt ugly.
If we are going to see some Hurricane activity in the Gulf, we need to see it now. If we fail to see meaningful storm activity in the next few weeks, we are going to see the deferred Futures months begin to trade down to come into line with the October front month contract. Already this week I saw evidence that this was starting to happen. I have not been overly friendly towards Gas for some time now. This week's action did nothing to alter my feelings.
One day soon, I really hope I have some good news for you. In the interim, be careful out there with energy stocks weighted towards Gas.
This Week - For my Regular Subscribers
The venerable Henry Groppe spoke out this week. I review with my regular subscribers what this man had to say.
A $4 billion acquisition in the works. Find how by who and for whom.
The "crack spread". What is this rather strange sounding thing? This week for my subscribers I again review the "crack spread" and show how it can signal turns in the Oil market. This is a valuable tool that many people have never heard of.
This week I review some shares of large refiners that have been affected by this drop in Crude. I bring readers up to speed on the Bull Call Spreads I recommended last week.
This week I again update readers on the broader energy equity markets by way of the 3 ETF's that I follow. Is a turning point at hand? Looks like it just may be.
Russian hegemony. What is Mr. Putin up to now?
And, this week I continue my look at alternative energy with a look at two more Uranium companies. Is one trying to take over the other?
While you are waiting for the energy markets to settle down, give some serious thought to subscribing to the newsletter products available to you at www.themarkettraders.com. As we stabilize in the energy markets, use the ideas that I present to my subscribers to take advantage of the next upswing in the energy sector. Use the ideas that Merv expounds to his subscribers in his Precious Metals newsletter to take advantage of the next upswing in metals prices. Each week I take an in depth look at the energy markets and even profile as many as 9 different stocks to consider as trading candidates. All in all, excellent value for your hard earned dollar.