Will the Oil Bull Market Continue?
Daily Profit

Syndication

News

  • I'm hosting an exclusive online video event, "Profiting from Crisis in Europe". Investors are scratching their heads trying to figure out how to make money in the markets with Europe's debt crisis seemingly expanding everyday. Go to http://www.100kportfolio.tv/video to find out more.

Your Daily Profit

 

June 11, 2009

 

*****Bullish on Oil?

*****43% Average Gain

*****New Feature for Daily Profit

 

Fellow Investor,

 

The International Energy Agency (IEA) reported that demand for oil is picking up. Instead of the 3% drop in demand, the IEA says that it now expects demand to be off a whopping – drumroll please – 2.9%. Sheesh.

 

When you’re talking about 83.5 million barrels a day, a one-tenth of a percent revision should not be headline news. Somebody owes me an apology.

 

But seriously, I think it’s pretty much understood that any statistic thrown out there by some agency or department is subject to revision. In fact, I get suspicious when numbers don’t get revised…

 

*****Economics is the study of a human system of production and consumption of goods. And because it’s a human system, there must always be some margin for error.

 

Especially at this stage of the recession/recovery, numbers are going to swing wildly. Retail sales, foreclosures, payrolls, it doesn’t matter – the headline number will get revised.

 

Of course, this is what makes investing interesting. The data can only take you so far. And if one relies solely on economic data for buy and sell signals, poor results are inevitable.

 

*****As you know, I was quick to jump on oil stocks at the start of the current rally. Oil was trading around $40 a barrel when I recommended three  small oil stocks in my SmallCapInvestor PRO advisory service and also recommended Graham Corp (AMEX:GHM) here to Daily Profit readers.

 

Obviously, investor sentiment toward oil has changed dramatically since I first started pushing oil stocks. That’s what happens when an asset doubles in price in just a few months.

 

In fact, the bullish sentiment behind oil and oil stocks is so extreme that I’ve told SmallCapInvestor PRO to sell one oil stock and take the 142% gains we had off the table. Oil prices are due for a big correction, and there’s no way I’m going to lose such a nice gain.

 

I’ll be buying back oil stocks sometime this summer. And if you missed the big gains in oil this time around, don’t worry, you’ll get another chance. I’ll cover oil consistently here in Daily Profit. And you can also get my stock recommendations on the next sector to run up, China, for SmallCapInvestor PRO HERE. So far this year, SmallCapInvestor PRO members are averaging 43% gains per recommendation.

 

*****I have one more announcement today. Jason Cimpl, the technical analyst for TradeMaster Daily Stock Alerts has graciously offered to start sharing his weekly forecasts with Daily Profit readers on Fridays. So tomorrow, you should get your first video chart analysis from Jason.

 

He’s done a great job of keeping his readers in profitable trades during this rally. And his insights into what’s driving stock prices and where they are likely to head next should prove a worthy addition to this letter.

 

*****As always, please write and share your thoughts and comments: [email protected]. I’ll talk to you tomorrow.

 

Ian Wyatt

Editor

Daily Profit





Posted 06-11-2009 1:28 PM by Ian Wyatt
Filed under: , , ,

Comments

JCHarper wrote re: Will the Oil Bull Market Continue?
on 06-11-2009 6:32 PM

Is it a bull market in oil or a bear market in currencies (monetary inflation) including but not limited to the US$? If all currencies inflate, then it won't show up in the exchange rates between currencies.

The oil supply/demand situation would argue that it is the latter. If so, the bull market might continue until the central banks sop up the money they have created.

Just a thought. I really haven't made up my mind.

Cordially,

John C. Harper

Ian Wyatt wrote re: Will the Oil Bull Market Continue?
on 06-15-2009 10:46 AM

JC, thanks for the question on oil and currencies. Before getting back with you I put this out to the research team to get additional insights. Here's what we're thinking...

I think we'd have to say it's both. Or at least: a bear market for the dollar is creating a bull market for oil.

As for supply/demand, the specifics might not support higher oil prices right now, but there can be little doubt oil prices will rise as demand returns with economic growth. And there is also no doubt that a lot of companies have re-hedged their oil needs at relatively lower prices. This is supporting oil prices, too.