Friday, August 10, 2007

Energy and Precious Metals.... the piano player.

I want to focus on the following due to my belief we in a a LONG TERM major bull market in energy. By that I mean oil, natural gas, coal, uranium(nuclear), geothermal, along with solar and wind to a smaller extant. The Dow Jones US. Oil and Gas index ($DJUSEN) paints a great picture. The margin clerks are working overtime. Besides its liquidity there are some mucho profits in the is sector hence the selling. I know and they know to sell your losers and keep your winners but don't underestimate the fear/panic factor here.

The Amex oil index ($XOI) paints a similar picture.

The Philly Oil Service index ($OSX) again paints a similar picture.

The USO chart echos the above. We could shoot further down here but this is not the time to sell this one, one should be thinking to get long here on a turn. This is one market where as Pompom TV would say... the fundamentals have not changed !

As I noted above the ultimate liquidity around the globe. Always a bid and very liquid. Again some profits here coupled with the liquidity equals cash for the margin call. You are never supposed to meet a margin call or at least that is what I was taught. (its the markets way of telling you that you are wrong, gee have I said that before?) but now there is NO BID for this toxic paper around the globe and to meet the call they must sell what has a bid, hence gold and oil are similar to the piano player at the house of ill repute, which when raided, get hauled off to jail like everyone else ! Good trading to you all.

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