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Finance / the Markets

  • Time to Sit Back and Plan Your Next Investment strategy

    With crude oil and crude oil-related stocks exhibiting nearly free-fall characteristics, unless you’re willing to play the short-side after an almost three month sell-off, this week it may be best to sit back and plan your next investment strategy while waiting for the markets to reach strong value areas.This week’s sell-off in crude oil and energy stocks was strong enough to pull the rest of the U.S. stock market down. This is a sign that money managers are beginning to sit up and take notice. Investment managers may have been complacent throughout the year because the liquidity provided by the…

  • Exxon Mobil and the Oil Markets

    The price action by Exxon Mobil (XOM) puts this stock on the radar this week. This market is significant because it is a major component of the S&P 500 Index as well as a strong indicator of future price action in crude oil.When comparing the Exxon chart to the S&P 500 chart, one will notice the divergence between the two. Since reaching a top at $95.49 the week-ending July 26, Exxon has sold off sharply, reflecting the strong correlation to the price of crude oil.Even with the broad-based S&P 500 market trading at an all-time high, Exxon has not been…

  • Energy Market Review & Forecast – 29th August 2014

    Weekly Crude OilOctober crude oil futures continued to consolidate on the weekly chart after reaching a low two weeks ago at $92.50. Speculative investors may conclude that this is a buying opportunity, but trend traders are likely to treat any rally as the next potential shorting opportunity.End-of-the-month position squaring and profit-taking by hedge fund and other money managers are helping to stabilize the market following the prolonged break in price and time from the June top at $105.55. However, the biggest influence on the market last week was the surprise drawdown in supply.The latest U.S. Energy Information Administration supply and…

  • Time To Go Long WTI, If Only By Proxy

    It is no secret that, since I first started contributing here, I have been somewhat bearish on the price of oil, or more specifically on West Texas Intermediate (WTI). That doesn’t mean that I don’t see long term opportunity in U.S. based oil stocks; I do, but the very thing that makes them attractive, the boom in oil production in the U.S. also, by definition, limits the upside to the price of oil, all else being equal. That seemingly contradictory stance has been vindicated, I guess, as WTI futures have dropped below $100, even as the energy sector has outperformed…

  • Oil Majors Face Long-Term Challenges

    It is quarterly earnings season and the latest figures are in. The world’s major oil companies posted mixed results. Some were good, some were bad, some showed signs of short-term optimism, but several have once again hinted at some worrying underlying trends that could play out over the long-term.First, BP (NYSE: BP) saw its profits increase by more than 65 percent from a year earlier, a highly impressive number. The British oil giant posted over $3.37 billion in second quarter profits, up from $2.04 billion in the second quarter of 2013. The gains came largely from its 19.75 percent stake…

  • A Shift in Sentiment for October Gasoline Futures?

    Gasoline Futures OutlookThis week’s technical chart pattern and a slight change in the fundamentals may be indications of an impending shift in sentiment for October Gasoline futures. At the same time, the price action and fundamentals remain bearish for crude oil.Further evidence that gasoline may be poised to rise while support for crude oil continues to erode was seen in this week’s widening of the crack spread. The crack spread is a rough measure of the profit from processing a barrel of oil into gasoline. Just like some professionals trade the price differential between Brent Crude Oil and WTI Crude…

  • The Fed Decision: Analyzing the Reaction

    Just in case you are living under a rock and missed it, on Wednesday the new Fed chair, Janet Yellen, gave her first press conference following a rate decision. Fed release day always brings back memories for me. There was a unique atmosphere in a dealing room while awaiting the rate decision. Usually trading stopped and orders were withdrawn a minute or so before the scheduled release, even if nothing momentous was expected. All eyes went to the screens, waiting for the news. There was a sense of anticipation and excitement, but after a few years I realized that the…

  • Forget Momentum – 2014 is About Value

    It’s been a tough winter, and not just because of the weather.  The markets have given us opportunity but it’s been a barbed-wire wrapped one:  Big moves down have looked impossible to buy and have sent me running for conservative, dividend paying stocks.  But this latest swing bringing the Dow again above 16,000 looks equally dangerous.  Once again it strikes me that the only reasons to buy stocks are as an arbitrage against surprisingly strong bonds – as long as that 10 year yield hovers near 2.5%, you’ve got no choice but to invest in stocks.  I’ve been trying to…

  • Oil Market Forecast & Review 7th February 2014

    March crude oil futures rose to even for the year, erasing all of the loss from the December 31, 2013 close at $98.55. Positive U.S. economic data, stabilizing equity markets and supportive data from government reports showing increased demand for petroleum products underpinned the futures market most of the week.A greater-than-expected drop in jobless claims helped drive up crude oil on Thursday, setting the tone for a strong close going into next week. The major determinant of next week’s action should be Friday’s U.S. Non-Farm Payrolls report. In January, it was reported the economy added only 74,000 new jobs in…

  • Oil Market Forecast & Review 31st January 2014

    Crude oil futures surged this week as traders appeared to be unfazed by a few of the traditional fundamentals that should have curtailed the upside action. This week, the Energy Information Administration (EIA) reported that U.S. crude oil stocks jumped 6.4 million barrels during the week-ended January 24. Analysts were looking for the data to show a 2.1 million barrel increase. Prices rallied despite production increases after cold weather shut down many U.S. refiners in the Midwest and East Coast the previous week. A greater than expected increase in crude oil imports also contributed to the increase in supply. The…