Weekend July 14, 2012
The Key Market is Oil as this is THE most emotional market on the planet. The first derivative of oil is Energy Services. These companies live in a wild yo you string of
Yes We Want You and More, when oil prices are rising
No One Home to Answer the Phone, when oil prices are falling.
And so the prices of their services and their stock prices swing more wildly than the price of the Energy Companies themselves. Regular readers, assuming there still are some, will recall our recommendation last December for RIG. The origins of this company can be traced back to SEDCO (not the current Arabian company), the company of former Texas Governor Bill Clements. Most of the big offshore drillers merged to better endure theses very swings in price. Now it costs hundreds of thousands to 'rent' one of the rigs, whether you are using it that day or not.
At the end of 2011, funds sold RIG so it would disappear from their holdings list at year end. The same thing occurred at the end of June. Now we have three higher lows and a break above the MAs.
Here is another Social Mood Change
Nat Gas Trust
Just forty five days ago one could read serious predictions that natural gas would sink to somewhere between $1 and zero, after all the storage facilities were full and everyone was furiously over producing. Since then natural gas futures moved from about 1.90 to 2.90. a 52% increase in a month and a half.
We think the same sort of mood change will shortly occur in bonds and the Dollar. Stay tuned.