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Energy at top? Does ANYONE believe this?


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#1 calmcookie

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Posted 21 August 2005 - 09:01 AM

Just curious if anyone thinks the energy rise is
a bubble waiting to burst. I DON'T THINK SO.

But alternate opinions, with REASONS sought.


High fat cookie, :P

#2 PorkLoin

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Posted 21 August 2005 - 11:08 AM

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CC, demand for energy is still increasing faster than supply, so I tend to agree with you. However, the fundamentals often look darn good at market tops.

The momentum upwards on the charts was so strong that I would expect more divergent action at any final price high. And of course the market won't necessarily give us what we expect. (Duh!)

The last advance to the August high was steep. Nothing new for this market. Doesn't feel like an ending, commodities-style blowoff parabolic top to me, but you never know.

In early 2003 oil fell hard, $40 to $25, roughly a 40% haircut. Late last year, whammo - down from $55 to $40, almost exactly touching the top of that early 2003 peak. Quite a pretty chart, but even in the context of the Big Bull such stuff can occur.

Looking at the charts, we may have completed the rally from late last year, and that was a $40 to $67 move -- significant. Could have also finished the long rally from the end of 2002 -- looks like five waves up there too. If so, even in an ongoing bull market, we could pull back to $40 without destroying overall bullish wave patterns.

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Natural gas prices are holding up very well. Oil has declined steeply, but hasn't even really tested the support of the July high right below $62.50 -- the last little top prior to the August high. Last Thursday there was an intraday move lower but it couldn't get down there, and closed back up near the day's open, to be followed by going higher Friday. Thus far, despite some significant declines in energy stocks, oil hasn't done anything more than the little fall after the June high.

Valero Energy went down far enough during last week that its P/E was 10. Is that a buy or what? Seems like it, to me, but I may have fallen in love with this market. For now, I think we need more chart action. The wave structure coming down from the recent peak, or from later ones if we just go back up now, should give us good clues.

Oil zoomed up $10 in only three weeks to the August high. If we haven't topped out, and really blast off higher later, i.e. really do go parabolic, then I'm gonna sell some, no matter what.

Doug

#3 calmcookie

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Posted 21 August 2005 - 01:57 PM

Thanks PL for your thoughtful response ... sounds sensible to me. We shall see. Best, C.C. :)

#4 mss

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Posted 21 August 2005 - 02:21 PM

:)
Everybody, who ever everybody is, wonts to hammer out that energy is at the TOP. There are several reasons for this from the brokage houses, but should not concern us . The broad XLE has formed a shallow topping action and only time will tell if it is going to get worse. Money does appear to be flowing out of this unit. Now for the good stuff, oil and gas stocks I think will consolidate in a flat to slightly down trending pattern and take off again after labor day. Yes gasoline consumption will decline "some" but the shortage will stay the same or get worse as some refineries have already switched to making heating oil. I got stopped out of some of my trading stocks, SJT, ACI, MEE and others, BUT, I still have them in my core accounts and will start to buy back into the trading accounts Mon or Tues. Of cource the buy back depends on price action etc and may wait longer, time will tell. B)

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Just some rambling thoughts, Doug and C.C. best to the both of you.
mss
:cat:
WOMEN & CATS WILL DO AS THEY PLEASE, AND MEN & DOGS SHOULD GET USED TO THE IDEA.
A DOG ALWAYS OFFERS UNCONDITIONAL LOVE. CATS HAVE TO THINK ABOUT IT!!

#5 calmcookie

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Posted 21 August 2005 - 08:51 PM

Thanks Mr. Black Cat. Appreciative, oily coated kitty. C.C. :blink:

Edited by calmcookie, 21 August 2005 - 08:56 PM.


#6 hiker

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Posted 21 August 2005 - 09:27 PM

hi CC....a link showing the results of a tabulation I ran for some energy-related stocks, showing the % bounce back after last week's selloff:

http://forums.techni...vpost?id=598160

Edited by hiker, 21 August 2005 - 09:27 PM.


#7 calmcookie

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Posted 22 August 2005 - 10:22 AM

Hey Hiker, Some very useful information in that list ... thanks so much! C.C. :D

#8 hiker

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Posted 22 August 2005 - 10:25 AM

sure thing, CC.

#9 Sentient Being

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Posted 27 August 2005 - 11:48 PM

Just using a little bit of logic. Someone posted (possibly on this board) that in terms of constant (inflation adjusted) dollars we have seen higher oil prices in the past. Back when gas was being rationed. So clearly it CAN go higher, we know that because it HAS gone higher in the past. I, myself would make no prediction either way. I can imagine any number of circumstances that could take gas higher or lower. A slow down in China, recession in the US, a reduction of middle east tensions, etc. As I read once in the book "Trading in The Zone" we know that anything can happen to take oil (or any stock) in any direction. Any trade can go against us at any time. My gut feeling is that a move from say 30 dollars a barrel to 60 dollars a barrel not likely to be a fixed price (indefinitely) without dropping back and hanging out at lower levels. I understand reasons for the price of oil to keep rising over time but I just don't think it will happen in a straight line. One good thing to come out of this is the Anti Energy crowd is being pushed to the side a bit and the country is looking for an energy policy that will deliver more affordable energy in the future. I can see one outcome of this is more energy friendly legislation encouraging the development of our own oil and gas resources as well as new refinaries and alternative energies. We have seen some of this already. The only energy policy we had for a long time was one of "energy is bad". Now the public clearly feels expensive energy is worse and wants some more of that good old cheap energy! I was stopped out of energy and await another buy signal.

Edited by Sentient Being, 27 August 2005 - 11:52 PM.

In the end we retain from our studies only that which we practically apply.

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#10 PorkLoin

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Posted 28 August 2005 - 12:34 AM

Sentient Being, looking only at the charts of late, I think there is a good chance of more downside in oil stocks, even if oil only goes down a little, like to $62 or $60. Your system sounds darn good to me if it took you out already.

For me, right now, it's a steady drumbeat of news about high gasoline, high oil, and the stocks (which I think should lead) diverging against crude, which is showing some divergences itself, and a possible double top, against the earlier peaks in March, June, and the first August high.

I know that oil is in a longer-term bull market. And it's that sentiment that contributes to me wanting to sell some, right now.

Best,

Doug