All About Oil

This editorial by John W Schoen does a good job explaining why oil prices are so high. Plus the difference between the limited supply of cheap oil and the far more expensive shale oil.

He ends his piece with an illuminating point.

Europe and Japan have a much higher tax on gasoline. This economically forces people  to use and find alternative fuels. When there are sharp price hikes these governments can lower the taxes to soften the blow. This is a major reason why so many other countries are so further along in seeking alternate energy solutions than the USA.

Four outstanding blogs go into depth on on energy related subjects

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KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Index Percentage Volume
Dow +1.03% flat
NASDQ +0.73% down
S&P 500 +0.89% down
Russell 2000 +1.53% -

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUSInvestors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated stock bubble. See Investors411 STRATEGY section for more

  • Same old manipulated by the Fed’s dump of liquidity, low volume stock rally that we have seen for the last few years.
  • From Seeking Alpha an editorial on commodities
  • Here’s a contrarian economist on what happens to stocks and the economy when the Fed’s QE2 stops on June 30th.

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Shorter Term Forecasting Indexes

  • The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar rose for the third day in a row. Up +0.40% yesterday. Chart for last three weeks still clearly bearish for dollar.   Oil prices now are by far the #1 forecasting index and its trumping the dollar see below) For stocks dollar short term trading pattern = Bullish/Neutral
  • McClellan Index(MO[The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO rose to -1.86Over the last three months the new parameters seems to be +/- 30 as an overbought/oversold level.  This narrow range is something I have never seen beforeMO Stocks outlookNeutral

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Reading The Tea Leaves

From YesterdayToday’s the big day - For three months the bulls have built a strong support level at -30 on the MO. Each time it has been approached it has held. We are just 2 points away. The bears have a big battering ram - oil prices over $100+ for an extended period of time.

The support level heldThe bears, as they have been for the last three months, were defeated.

As Chris states in the comments section of the blog the “MO at -30 works like magicFor three months the -30 level has been a buy signal.

No fundamental factor can seem to overcome the -30 level. Stocks can only become so oversold then the buyers step in.

  • Tunis & Egypt revolution – No problems
  • 100+ dollar oil – No problems
  • Libya – No problems
  • Other possible and simmering outbreaks in oil rich dictatorships – No problems

What’s holding up the bulls is the Fed’s market manipulation – O% interest rates to the TBTF & other shadow banks and quantitative easing.   This is all one big economic bubble building.

The problem for the bulls is that they can not break the bears resistance level at +30. This gives stocks a very small range on the MO to trade in – 60 points over the last three months. The range for the last three years and beyond had been over 200 points.

Why? - Best read of the tea leaves is all but the strongest holders have been chased out of the US stock market over the last few years. Every time stocks are threatened the Fed’s liquidity tsunami takes over. Our managed stock market  is bought when it starts to fall by the manipulators or money printers.

Bottom Line – Stocks have moved into a smaller trading range.

Special Note - Considering changing the Long Term Outlook to NEUTRAL at long as oil prices keep rising above $100+

What to watch today

  • USO - ETF for oil - Oil up = stocks down
  • UUP - (Tracking ETF for dollar) Clear 2 month pattern of bears ruling Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
  • AAPL – Took a hit yesterday as it approached former high.

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Positions

The Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions).

Current ETF Positions. (oldest held positions listed first)(see comments section where all trades are first announced)

  • REMX (1/2 position, took 5+% profits already) Inched out to new two month high yesterday
  • RJA 1/2 position, took 5+% profits already)
  • UCO – 1/2 position, took 6+% profit already)

A 5% trailing stop today on both REMX & RJA today.

5% trailing stop on UCO  today.

One strategy of Investors411 is to take 5+% profits on 1/2 the position and let the rest ride.

Will post when I buy/sell in comments section of blog.

This market is excellent for short term stock players

Buy when MO approaches -30 and Sell when it approaches  +30

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices.

REMX (Rare Earth ETF) - Really believe this a good long term holding.

DGP – (ETF is 2X gold) . Set to follow silver SLV and approaching breakout. Broke out to new all time high and has started to pull back. Buy the dip to 17 DMA of SLV or DGP

DBC - (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy.  A good alternative would be DJP that is more agriculture and metals - Both DBC & DJP are on breakout runs. Buy the dip to 17 DMA

RJA (Agriculture commodities Index)An ETN, not an ETF. Hopefully longer term holding. .

UWM (2x small cap stocks) TNA (3X small cap stocks)

Mea Culpa - In hindsight – It was unfortunate that the UWM positions trailing 5% stop was hit.

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including the new ”YOUR Stock List.

Special Note - Considering changing the Long Term Outlook to NEUTRAL -if oil prices remain above $100+ a barrel for a significant amount of time and/or keep rising.

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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