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It's cold up here and in China and in Europe, and in...


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#1 2cents

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Posted 09 February 2007 - 06:00 AM

If this market is going to move higher from here then energy has to lead. Energy has led the rally for 3 years and at this stage of the game things aren't likely to change. The only caveat is that oil and energy as a whole can head higher while the broader market heads lower. Most major portfolio managers believe we have avoided a recession in 07 because oil has come down. They all believe that the high price of oil was a tax on consumers that is no longer a threat. Bob Brinker, a well respected analyst and widely read by institutional investors echoed the feeling of many in his most recent letter. It is a much colder winter than expected throughout most of the globe. It's snowing in London today. It's extremely cold in the north of China and Europe and the long term forcast is more of the same. Supplies have been higher than expected but that may change in the next report. At the same time as oil is rising again the USD is failing overhead around 85. If the dollar heads lower and any geopolitical event concerning oil happens, oil could test it's high within days. The OIH looks like it is bottoming as well so the whole group is setting up for a run after a typical correction in a multi year bull run. This resurgance in energy should help to soften the blow to the broader markets.
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#2 greenie

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Posted 09 February 2007 - 08:07 AM

Hi 2cents, It is really warm here in India. In fact, I do not remember it being so hot in January and February. Maybe we can help keep the price of oil down :) But seriously, I would not touch long side of the oil sector for another 2-3 years. It showed signs of 'major top' in June. To identify major top, I look into popular sentiment. If housing topped in August '05 (Time magazine cover), oil sector did the same in June '06. At that time, people in parties told me how they were immuned from rising gas prices, because they bought stocks of oil companies. And these are not parties of stockbrokers, but ordinary mortals. Also, every scientist I know is now starting a project on alternate biofuels. These are rare moments and I take notice. Good luck with your trades, Greenie
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#3 greenie

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Posted 09 February 2007 - 08:59 AM

A chart from bigpicture blog:

Posted Image
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It's the illiquidity, stupid !

#4 2cents

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Posted 09 February 2007 - 10:56 AM

A chart from bigpicture blog:





Greenie

Thanks for the info. Energy bull markets as with commodities last much longer than 3 years. I agree that alternative fuels will play a big roll in the future but I think we are a long way from that now. Sentiment for energy has been bad for months now even though the correction wasn't that deep. I think we will see 80 before 40 and have a 10 year average higher than 50.
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