Tuesday April 16 2013
Frantic
That is the only description for the jump in jump out nature of trading the last few days. Amid the gold and silver crash, that bled to stocks yesterday, something else caught my eye. Yes we are getting rebounds in stocks and gold and silver this morning,
Just as we have had rebounds in gold and silver since our exit last Sept 18 2012, think about that.
At any rate, I mentioned driving through the Eagle Ford Shale Area between San Antonio and Laredo last week. The amount of activity is simply phenomenal, ie, it looks a lot like the Stock market at SPX 1575. It is the literal translation of positive social mood towards the latest version of the gold find at Sutters Mill in 1848 or so. A previously beaten down area, forsaken as an economic wilderness has been transformed al the Beverly Hillbillies. And os we have frantic activity based on the perceptions of the past two years.
Here is what caught my eye yesterday.
Schlumberger SLB
Halliburton HAL
HAL and SLB are the two giants of energy service world wide.
WTIC Crude Oil
HAL and SLB have been following Crude Oil down since the February top. Recall from our posts that most of our internal indicators like the Summation Index for Stocks also topped in February, and they have been trending down since.
NYSE Summation Index
The Summation Index sums net advances and declines in stocks on an unweighted basis. It too topped in February. Now scan your eye down all four charts. The conclusion I reach is that they all exhibit the same pattern. Energy Service, Energy, and stock market internals are all signalling weakness.
You of course will not hear this on CNBC. I have the sound turned down but there is reliable Jim Cramer touting stocks again.
Different markets top at different times. This is how the majority is fooled and the down turn catches them off guard.
My experience is that no market is more sensitive to emotion than crude oil. I posted my newspaper column from a week ago asking What Could Go Wrong? Last week I delivered a short talk on the San Antonio economy. One observer afterwards was quoting construction statistics for San Antonio. This is not a primary indicator, it is a secondary indicator that issues from primary indicators like the oil price. Two years of expanding Eagle Shale production result in plans for Weatherford, Baker Hughes, and now Halliburton to build its third larges facility in the world here in San Antonio. In the mean time however, the price of oil is falling. After all there is no shortage of supply. And that in a nutshell is what could go wrong. Here is another puzzle piece in the same time frame, a bedrock of America company if ever there was one.
CAT
Again, it's the same graph, only much worse than HAL and SLB, this one has fallen under all the MAs.
The Dollar, Gaining Strength
We conclude this morning with one chart that is going the opposite way of Eenrgy Service, Crude Oil and CAT, the US Dollar. This morning it touched its 50 day MA but the trend is still up. Sure the US is printing too many dollars, but Venezuela and Europe are in even worse shape. Gold and oil priced in dollars are down as the dollar is up.
The Great Recession of 2013-2015 has begun, someone tell Jim Cramer....
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