iBankCoin
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Joined Apr 1, 2010
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Energy Maxing Out

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Despite the intense selling to close out last week, energy stocks are still holding a key multi-year area that I discussed two weeks ago in this blog post. The reason why I view energy stocks as such an important proxy for risk appetite here is that the bulls need them to stabilize. If you recall the bear market in 2008, the amount of highly levered hedge funds piled into (and rushing out of) high beta commodity stocks exacerbated the fierce, indiscriminate selling as the air came out of the tires in a deflationary environment. To that end, watching the key $62/$63 level on the XLE (ETF for energy stocks) is still important for the intermediate-term direction of the market.

On a related note, best of breed oil service firm Schlumberger is sporting a weekly chart that provides another crucial reference point. Understand that the fierce global liquidations over the past several weeks render short-term areas of support essentially useless, which is all the more reason to hone in on these major long-term levels. In essence, energy stocks are pushing these levels to the max. As you can see below, the “Slob” had better stabilize at $72 in order for the bulls to hold onto their recovery scenario.

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12 comments

  1. Bob

    Good position to grope and run

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  2. kmoney

    chess…thought for this wk ? with jackson hole meeting on friday? cash or net short start of the week?

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  3. Goldie

    Nice Chess.. Gotta look at the weekly charts to get that big picture..

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  4. pitbull

    I LOVe the picture..just like the{ major indeses , The overall Market …and your charts above ..Right were at support….. BUT Just Believe She Can do it !! Just Believe ,, ! Funny, she might , hate to tease her !
    Bet we drop down and spike to next level down for sure on energy charts above..think u can enter small positions n..but for me “.
    IF the MArkets DOES THIS ,,Then ,,THEN i’ll do that !
    i’m waitng and Buyimg then ! when? next level , aggressive :C” Entry

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  5. A name other than anon
    A name other than anon

    Thank you for the insight, chestnwine.

    It seems that none of my comments under “Anon” get posted here.

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  6. Vegastrader

    Great charts. The world will not end this week. Sooner or later yes. But next quarter $AAPL will anounce new record profit and sales and so will a lot of other strong companies including $AMZN and $NFLX. Dont confuse these companies with losers like $RIMM, $HPQ and $EBAY.

    As smaller companies get cheap it is time for some M&A. Remember the large whale companies are sitting with record cash levels on hand. Competitions gets eliminated and profits goes up.

    Real estate is a lot closer to the bottom. Population growth and immigration to the US will clear up the extra houses within a few years. With interest levels being so low and guaranteed low for years to come no worries.

    Employment is bad but companies are stretching their employees to the limit. Again while it can get a little worse it will get better sooner or later. Companies simply cannot growth without hiring.

    If your investment strategy is based on the total crash below 2009 levels. Good luck. Investors all know by now that only an idiot would sell his stock at those levels. The smart investor just buy more stock as we go down. The End game is a threat like Meteors and Super Volcanic eruptions. It is always there but life goes on.

    Best investment will always be Precious metals, commodities, farmland and companies. Cash will loose buying power.

    My top picks are $AAPL, $AMZN, $NFLX. They all have far to go before they top out.

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    • Po Pimp

      $AAPL I probably agree. $AMZN, maybe agree. $NFLX, no freakin’ way. That one is toast.

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      • Vegastrader

        Less people cut their subscription that you would think. People who depended on the DVD’s were already going to the RED BOX. The DVD rentals sucked for $NFLX due to postal delays and stolen mail. Very costly. I doubt if they really made any money on that and that is why they want to cut it off.

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        • Po Pimp

          But they are pinning a lot of future growth on subscriptions in South America and other places. Good luck trying to get people to pony up $10+ per month for something they can get for basically free at the local bootleg shop.

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  7. HalfBloodPope

    That might be best picture yet.

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