Friday Dec 6 2019
I wrote this column before the jobs reort, 266,000 + created, came out. Stocks moved up 1.2%, sooner than I anticipated.
End of Day A nice 1..2% advance
All Quiet on the Energy and Stock Front
Saudi Arabia prices its1 .5.% IPO of Aramco at $8.53 or a total of $25.6 billion, the largest IPO ever.
Vienna, Italy The proposed cuts would mean OPEC would hold back 1.7 million barrels per day MBPD, deepening the current1..2 MBPD.
WSJ Today
Do the algebra and that means ARAMCO is worth $1.7 trillion, but only if oil prices stay above $55 per barrel. Most sources I read put break even for many oil producers in the mid 50s range.
Such an IPO befits the social mood of an expanding market. Letting the world in on the great Saudi money machine is an inclusionary move. Positive social mood is brings people together and nothing accomplishes that better than the largest IPO ever. Even attempting to calculate which of the world’s exchanges to list on was a challenge. Note the markets continue up despite the partisan impeachment process and round the world work stoppages and protests in France, Hong Kong, Moscow, and now sprouting in various South American countries.
I have been looking for a low in energy share prices in this time frame. The actual low occurred in mid-August, a higher low in October and now a third low in early December. This is happening along with a pause in the rise in Industrials, Transports, ad the tech heavy NASD.
He moving averages have yet to turn up for the Energy ETF XLE. Cash strapped Exxon Mobil trades under all its our Moving Averages MA. Much better managed Conoco Phillips has vaulted over those same four Mas. The MAS on Chevron CVX ae converging which suggests a change in trend, probably to the upside.
There are signs that energy service may finally be bottoming. Schlumberger SLB is about to attack its 200 day MA. Halliburton is in much the same position. More patience will be needed ffor Patterson PTEN which has risen from its August low.
Chairman Greehey purchased $15 M of Nustar NS shares. And it is in a nice uptrend. The ETF of that group, Alerian MLP AMLP is perhaps making a low. This process is taking longer given the correction in the overall stock market.
The uber negative news on natural gas resulted in a bit of rally. It has duplicated the rise of oil with lows in August, October, and now early December. Devon DVN needs a close over 24 to indicate an uptrend has resumed.
The most reliable New York Stock Exchange Advance Decline Line is continuing to risep. Year-end tax selling has the major averages on hold. Expect this to continue until later say December 15-20. Then expect a Santa rally extending well into January.
A continued stock rally coupled with thee energy market improvement is about as good as we can expect from Santa this year.
