Category Archives for "Energy"

Has the Energy Sector Hit the Wall?

Today we look at the Energy Select Sector SPDR ETF (XLE) and ask whether the energy sector has hit the wall.

The XLE is one of the most active industry sector ETFs with a 50 day moving average of 95 million shares.  It tracks a market-cap weighted index of US energy companies in the S&P 500.  

Energy Sector

In the big decline from the peak in June 2014 to the low in January 2016, XLE smashed thru a major uptrend line from the 2002 low, in July 2015. It pulled back to it last November but then quickly fell away.

It has had a big move up off the January low, but running into significant resistance at 72.0. It has not broken down yet.  Watch for consecutive closes below the 10 week ema and then for the 10 ema to cross below the 21 sma.  Look at September 2014 and June 2015 for good examples.

Energy Sector

Weekly April 2011 – Sept 2016

The top three holdings in the Energy Sector ETF are Exxon Mobil (XOM) at 18.65%, Chevron (CVX) at 14.81% and Schlumberger (SLB) at 8.83%. I’ll start with Exxon Mobil. Continue reading

CAT Hitting a Wall?

CAT hitting the WallCaterpillar(CAT) cut its first quarter revenue and earnings guidance but held to the full year guidance.  I should add, at least for now.  I look at CAT in the brief video below.

As you can see in the chart below, CAT dropped from a closing high of 111.40 in July 2014 to a closing low of 57.91 in January this year. That’s nearly a 50% drop. Continue reading

Contrarian Perspective

Death of Equities, a contrarian perspective helpsWhen it comes to the markets, I believe you need to be thinking with a little bit of a contrarian perspective.  When  a lot of people are doing the same thing or talking about the same thing then “red flags” should go up in your mind.  One of the classic signals of the last 50 years was when BusinessWeek had their “The Death of Equities” cover of their magazine on August 13,1979.

When the psychology gets to the point where the magazines are putting it on the cover, then many times it means we are probably at or near an extreme.  On August 13, 1979, the Dow Jones Industrial Average (DJIA) was 875, 10 years later it was around 2700 and around the beginning of the year 2000 it had closed at 11,722.  One of the greatest bull markets of all time. Continue reading

What is Oil Telling Us This Time?

what is oil telling us this time?Oil has dropped for about a year now. The move seems relentless. During the 2008-2009 cycle, oil and just about every other commodity when down, along with the stock market.

Maybe the move in oil and other commodities was tied to the economic impact of the market decline in 2008. And because the market (and economy) came very close to going completely over the edge, it took everything down with it.

Commodities Leading?

So here we are in 2015 and the market is still holding up after almost 6 ½ years of rally but oil, gold and other commodities are going down and have been for a while.

So why the disconnect? Maybe oil has dropped because of an oversupply in the global markets. Maybe the demand has softened more than we really know, especially in China.

I talked about Caterpillar’s weak global outlook last week and that doesn’t seem too optimistic for global economic recovery. Oil stocks in some cases are hitting 10-15+ year lows.

Look at other commodity related stocks…copper, coal, iron ore..you name it, all plummeting. And here we are after 6 ½ years of economic recovery and the IMF is still telling the FED to move carefully on interest rates as the economies are fragile.

Deflation

Ben Bernanke spent years studying the Great Depression.  As a result the Fed implemented QE1, 2 and 3 to try to provide what was lacking in the early 1930s. Providing huge amounts of money this time…helped keep economies afloat, at least for a while.

The problem is a huge amount of debt out there that continues to weigh on the global economies. Deflation seems to have gotten a foothold in Europe anyway and may be spreading.  Commodities seem to be saying deflation is alive and global economies are not very strong.

So as opposed to 2008 when everything went down together, maybe commodities are leading this time.  And maybe China is the canary in the coal mine for the other markets in the world…ours included.

In Focus

In keeping with the commodity theme I look at 8 stocks today: Caterpillar (CAT), Fluor (FLR), Apache (APA), Chesapeake Energy (CHK), Freeport McMoran (FCX), BHP Billiton (BHP), Cliffs Natural Resources (CLF) and Peabody Energy (BTU).

Video Timeline

  • Indices         [00:00]
  • Indicators     [10:03]
  • Key ETFs     [12:42]
  • Sector ETFs [17:35]
  • CAT [21:32]
  • FLR [23:13]
  • APA [24:24]
  • CHK [25:09]
  • FCX [26:41]
  • BHP [27:46]
  • CLF [29:53]
  • BTU [30:57]


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All-Time High | Stock Market Wrap-Up

All-Time HighThe Nasdaq closed today at a new all-time high, 5056.06. The thing about all-time highs…you never know when that’s going to be the all-time high that stands for another 15 years.  It has taken the Nasdaq 15 years to get back to that point of extreme exuberance reached on March 10, 2000. The New York Composite Index (NYA) also closed a new all-time high. Continue reading

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