Just the Facts on Peak Oil

You can find a clear short presentation on the myths and facts of peak oil in big bold easy to read type and charts in pdf format here

This is easy to understand and you can send it to any skeptical friends.

The hidden cost at the pump

So you think that you’re paying only $4.00 a gallon to fuel that internal combustion engine. Wrong – You’re paying trillions more. Here are the top three hidden costs that American corporate media rarely mentions or associates with the vehicle you drive.

1) The environmental impact alone cost’s you trillions Everything from cancer to as breathing disorders
2) Oil Wars that started with oil rich Iraq will continue to grow and cost trillions (Nobel Pride winner put the cost of the Iraq war alone at @ $2 trillion)
3 Global Warming’s worst case scenario is a planet wide meltdown.

Honda and Hydrogen car

Honda introduced its hydrogen car this week and 200 prototypes are being manufactured for California (The state is willing to set up hydrogen stations) and Japan. Site of this fuel efficient zero emissions car here

Correction – not quite zero emissions – it emits water vapor.

Stocks

Index % Change Volume

Dow -0.31% down
NASDQ +0.83% down
S&P500 +0.01% down
Russell2000 +0.97% –

US Markets

Both the NASDQ and the Russell 2000 moved ahead in light decreasing volume. These two indexes, as predicted a month or two ago are still leading the Dow and S&P 500 in relative performance.

Chart of benchmark S&P 500

Chart of crude oil (WTIC)

Oil prices have consolidated or flattened over the last 6 trading days at around $135 a barrel Prices did briefly reached a new high yesterday, but fell back into the short term consolidation pattern.

Oil prices rule. It’s hard to see USA equities move higher unless there is a break in oil prices.

Reading the Tea Leaves – Technically the short sideways movement in oil prices is likely to be just another pause before a move higher. More often than not a sideways movement in a trending sector is just consolidation of over bought positions before the next move higher. The short three day rally in stocks has NOT had any increased volume behind it. Bad news for bulls. Looks like bears are getting ready to mount a charge.

Recommended Sectors (Long Term Outlook)

GLD – Gold ETF (5%). Market Updates used to have a much larger position in gold, but most of that was sold this spring. Gold is our hedge against a total meltdown in the US and the US dollar.

The daily and weekly chart of GLD

Technically, the gold chart is in danger of breaking its long term bullish trend. The long term weekly chart show an upward trending sector (40 week or 200 day moving average is still moving up (see chart). GLD has moved back to its 40 week moving average and that’s usually the time to buy. However, there has been a lot of weeks where big money (huge volume) has sold gold. Best guess here is GLD looks like it is entering a long consolidation period like it did from May 06 to Oct. 07.

There is some positive correlation between oil and gold prices rising and inverse correlation with the dollar. So for right now let’s wait to see if there is a breakout in the short term charts one way or the other.

Bottom Line

Long Term Outlook CAUTIOUSLY BEARISH – High oil prices are holding back potential rallies. Unemployment jump of 0.5% in May – biggest in decades. (Caution – this “Outlook” is based on US equities and while US markets greatly influence other markets it is not necessarily the outlook for recommended sectors.)

The question for Wall Street is not whether there will be a recession or not, but how long will it last.

Asset Allocation/Recommended Sectors (long term)

* 40% Cash
* 35% Energy-
EWZ, (Brazil) & RSX (Russia) two energy rich countries. TRAMX – mutual fund for oil rich Mideast
PBW and GEX (alternative energy).
XLE (energy companies) OIH (oil services) USO (oil prices) UNG (natural gas prices)
KOL (coal companies)
* 15% Commodities – MOO Agribusiness, XME (mining & minerals)
* 5% Steel – SLX (Steel)
* 5% Gold – GLD (Gold)

Chief Strategy – Buy the dips of trending sector
Changes to Bottom Line Section Bolded .

As Always Do Your Own Research Before Investing

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