Friday, March 30, 2007
F- T. Boone Pickens
It's amazing how much attention is given to oil on bubblevision. Guys like Bolling and Pickens have become legends. Oil has been anointed as the one industry group that is "bulletproof". In the first of hopefully many posts here on the weekend shift I am here to build the technical case for a top in oil and outline two short ideas.
Looking at the above 3 year weekly chart of the Amex Oil Index is it noteworthy that despite the Iran headlines and $3.50 move in Crude this week, the index was unable to exceed its previous all-time high of 1242. Also worth noting is the weekly candlestick could represent a key reversal if we see continuation on the downside next week.
Drilling down to a 1 year daily time frame one can see that the index reversed the past two days' gains with today's ugly stick and made a weekly close below the critical 1220 level - a level where XOI failed in August and December of last year.
These potentially bearish clues are supported by underlying weakness in many individual oil names as evidenced by the declining Bullish Percent trend in the Energy Sector (below).
The weakness in the CRB Index is also noteworthy. My belief is the index will reverse lower en route to a low in the 265-270 area.
The 3-year chart below is of the US Dollar Index. Note the potential double bottom forming here and the higher lows relative to 2005. I am looking for a move above 85 to confirm the double bottom thesis.
WHAT IT WILL LOOK LIKE IF I AM WRONG
A move above the November high of 322 in the CRB Index will negate the thesis if accompanied by a weekly close below 82 in the US Dollar and/or a close above 1242 in the XOI. The beauty of this setup is the risk profile is clearly defined and the indices only have to move a small amount before having to reassess. The market action next week may be choppy due to the holidays so I encourage some patience.
Tomorrow's post will outline trading strategies for my two short ideas. I welcome any feedback and suggestions. This is one of my first posts of my blogging career so please bear with me as I obtain the experience and tools necessary to make a compelling technical argument (trend lines and annotations coming soon!).
Finally, in conjunction with The Fly's success investing in companies that cater to the the poor dietary habits of Americans, check out my blog tomorrow http://www.50kto5m.blogspot.com/ and help develop the thesis on my Fat Bastard Pick.
Comments:
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what's with these guest bloggers either posting multiple charts or essays. you guys need to add some personality to your posts in order to not get fired.
next.
next.
You need more insults, jabs, bravado, innuendo, and most of all you need threats of violence.
Besides that, calling for a long term top in oil is over-the-top ridiculous. Not only do I see the fundamentals cutting your theory off at the knees but frankly there will be large institutions and hedge funds looking to ride an epic bull trend in the energy complex that it will be a self fulfilling prophecy. Very short term this may be the right call, but longer term your ludicrous prognostications will be wrong.
That being said, at least you included an analysis of the US dollar situation which any analysis of this kind needs to acknowledge. I'm not bullish on the US dollar and that's a part of my longer term bullish energy tilt.
I will vote to fire you simply because I will be able to read your own blog to pick up other tidbits of shaky research and tripe analysis at your own blog.
Best
Besides that, calling for a long term top in oil is over-the-top ridiculous. Not only do I see the fundamentals cutting your theory off at the knees but frankly there will be large institutions and hedge funds looking to ride an epic bull trend in the energy complex that it will be a self fulfilling prophecy. Very short term this may be the right call, but longer term your ludicrous prognostications will be wrong.
That being said, at least you included an analysis of the US dollar situation which any analysis of this kind needs to acknowledge. I'm not bullish on the US dollar and that's a part of my longer term bullish energy tilt.
I will vote to fire you simply because I will be able to read your own blog to pick up other tidbits of shaky research and tripe analysis at your own blog.
Best
# posted by 
: 1:57 AM
: 1:57 AM
Fly, I think you've got a winner (no disrespect to WS or Ducati, of course).
As far as I can tell, the $XOI does look rather vulnerable. The apparent triple top, combined with the most recent candle seems ominous. Weakness in the $BPENER also seems to corroborate the bearish hypothesis -- at least in the short term. Of course, as mdawsz pointed out, the long term prospects for oil (which have been revealed by fundamental rather than technical analysis) do seem rather bullish. Perhaps kidstock's analysis simply helps us to anticipate a near term correction that would present a better entry point into a long position.
However, I'm not convinced that alleged confirmations from the either the $CRB or the $USD are warranted. Is there sufficient correlation between them and the $XOI to justify their use in evaluating the supply/demand of oil? On a fundamental level, it seems that there would be- but I would be curious to know if there's a there, there. Does anyone have any data substantiating such a correlation?
Question for kidstock:
Why do you anticipate a reversal in the commodity aggregate? Also, why would you expect to see support in the 265-270 range? I'm rather new to all of this, but wouldn't the 280-285 area also make sense?
Thanks!
-Jeremy
As far as I can tell, the $XOI does look rather vulnerable. The apparent triple top, combined with the most recent candle seems ominous. Weakness in the $BPENER also seems to corroborate the bearish hypothesis -- at least in the short term. Of course, as mdawsz pointed out, the long term prospects for oil (which have been revealed by fundamental rather than technical analysis) do seem rather bullish. Perhaps kidstock's analysis simply helps us to anticipate a near term correction that would present a better entry point into a long position.
However, I'm not convinced that alleged confirmations from the either the $CRB or the $USD are warranted. Is there sufficient correlation between them and the $XOI to justify their use in evaluating the supply/demand of oil? On a fundamental level, it seems that there would be- but I would be curious to know if there's a there, there. Does anyone have any data substantiating such a correlation?
Question for kidstock:
Why do you anticipate a reversal in the commodity aggregate? Also, why would you expect to see support in the 265-270 range? I'm rather new to all of this, but wouldn't the 280-285 area also make sense?
Thanks!
-Jeremy
bsd, how do we know that you aren't kidstock himself? Most likely that is the case. At least we can conclude that kidstock puts on an aggressive although passive defense. Nice try.
# posted by : 2:45 AM
: 2:45 AM
Mdawsz- reading your blog is like trying to pick out an individual Zebra within a running pack. Take a look at it, think about what I'm saying, and you'll agree. Maybe when SDB starts posting there it will be worth the bytes its using.
Other than that, give the Kid a chance to get his sea legs. Its his first post in the blogsosphere. You've posted like 200 times and each one is worse than the one that came before.
Regards-
Other than that, give the Kid a chance to get his sea legs. Its his first post in the blogsosphere. You've posted like 200 times and each one is worse than the one that came before.
Regards-
mdawsz,
Don't the questions in my post seem to be inconsistent with what we might expect of kidstock if he were truly making an attempt to defend himself? After all, I did express several concerns (in addition to a few gestures of agreement)...
If this weren't reason enough to reject the idea that we were the same person, I might try to discredit the accusation if I knew how to convincingly prove otherwise. But even if I knew how, I'm not sure what the motivation for such a defense would be. In fact, I'm not sure that there's a motivation in accusing kidstock of using multiple aliases beyond the attack of his character.
Don't the questions in my post seem to be inconsistent with what we might expect of kidstock if he were truly making an attempt to defend himself? After all, I did express several concerns (in addition to a few gestures of agreement)...
If this weren't reason enough to reject the idea that we were the same person, I might try to discredit the accusation if I knew how to convincingly prove otherwise. But even if I knew how, I'm not sure what the motivation for such a defense would be. In fact, I'm not sure that there's a motivation in accusing kidstock of using multiple aliases beyond the attack of his character.
I will liven up my next post but wanted to lay the ground work for my thesis. Yes the bull case is quite clear for oil but there comes a point in time when the analysis is no longer forward-looking. Perhaps the lower high in $XOI this week represents a change in character for the group. My goal is to identify those subtle clues ahead of the crowd. This could potentially be the first lower high in the group - time will tell. I heard one floor trader on CNBC comment on the massive call buying in the 80 and 100 strikes many months out...$80 oil is a given in the minds of many now that the commodity has broken above its 200 day moving average. When there is this much certainty I am on the hunt for clues to the contrary.
Hey, I like the kid. Oil is topping and all of you peak oil people need a reality check, oil isn't close to a peak in terms of recoverable supplies.
There is plenty of it in the ground for at least another 100 years, probably 200 if you count the more expensive to recover oil sands.
The only near term supply problem for oil is the political will to drill for it, which is MIA at this point, but that will come eventually.
Long term, oil may be higher 20 years from now, but who wants to put their money in oil for 20 years just to catch a 10 or 20 point move? Besides, it will hit $50 before it hits $80 or $90, unless there is a war with Iran.
Overall, I think the kid did a fine job.
I vote to keep him.
There is plenty of it in the ground for at least another 100 years, probably 200 if you count the more expensive to recover oil sands.
The only near term supply problem for oil is the political will to drill for it, which is MIA at this point, but that will come eventually.
Long term, oil may be higher 20 years from now, but who wants to put their money in oil for 20 years just to catch a 10 or 20 point move? Besides, it will hit $50 before it hits $80 or $90, unless there is a war with Iran.
Overall, I think the kid did a fine job.
I vote to keep him.
# posted by : 8:44 AM
: 8:44 AM
Questioning the long term fundamentals of oil is ignorant. Bet against it short term to correct from geopolitical concerns is fine, do it long term and you're fucked. Oil sands? Please, take a look at the energy ratio of energy captured vs expended to get that oil to market. It's about 2 to 1, maybe 4 to 1. Oil from Saudi? About 30 to 1. See the difference? It takes 10 barrals of sands oil to equal the aggregate energy in the market place of one barrel of Saudi Oil.....similar numbers to deep sea oil although a bit better; in the neighborhood of 10 to 1. It's not about how much oil is in the ground....it's about how much it costs to get it out. Steve Forbes agrees with you....that's your second clue you're on the wrong track. Fly's wrong, Kid's wrong and your wrong. I'm right. This is game over and lights out. Oil will cross $150 a barrel in the next 10 years. I'm a geologist and in my professional community we laugh at investment neophytes speaking out against the inevitable rise. We laugh while we continue to stuff our portfolio's with RIG, HAL, XOM, GSF, ECA etc. I'm laughing still, not buying this week as their is a better price in store just as soon as this shit in Iran settles down, but there will be another issue somewhere. Hurricanes in the Gulf, Iran, Iraq, terrorist acts, Nigeria, just pick one. But the two most important were barely mentioned--Norway and Mexico are now net importers of oil. Last year they were exporters. Russia is filling that void while bringing on line every oil field they can find. There all small and offer just a few years of production. Clue light coming on? If not, it will. Oil will rise 10-15% per year on average for the next 10 years. I don't see how stocks can keep up a decent return in that environment, some will, but as a whole, not a chance.
SPECTRE
SPECTRE
A geologist makes as much in a year as "The Fly" does in a day...while I appreciate the insight, I could give a fuck about the fundamental justifications for $150 oil.
Also keep in mind that oil only has to stay above $45 per barrel to make oil sands financially viable, and that's with today's technology.
The problem with your geologist community is you fail to take into consideration advancements in technology and the energy industry's ability to adapt and find new ways to extract energy from the ground.
BP is spending a billion to upgrade a northern Indiana refinery to process Canadian oil sands, and there is talk of building a pipeline to transport the stuff, though I doubt the enviro community will let that happen.
Mexico is importing because the government is corrupt and their oil industry is poorly run and maintained, just like everything else in Mexico.
Hell, give Chavez a couple more years to implement his radical socialist agenda and Venezuela will be importing oil a decade from now too.
None of this has to do with the amount of oil in the ground, which is substantial. Yes, it will cost more than the $5 to $10 per barrel that the easy to recover oil costs now, but technology marches on and oil companies will find a way to recover harder to reach supplies more cost effectively. And yes, eventually the stuff will run out, but not in my lifetime.
In the meantime, oil appears to have topped. And, should the U.S. economy slide into a recession dragging the global economy with it, then $50 oil will be back. Then you load up on XOM in anticipation of the economic recovery.
The problem with your geologist community is you fail to take into consideration advancements in technology and the energy industry's ability to adapt and find new ways to extract energy from the ground.
BP is spending a billion to upgrade a northern Indiana refinery to process Canadian oil sands, and there is talk of building a pipeline to transport the stuff, though I doubt the enviro community will let that happen.
Mexico is importing because the government is corrupt and their oil industry is poorly run and maintained, just like everything else in Mexico.
Hell, give Chavez a couple more years to implement his radical socialist agenda and Venezuela will be importing oil a decade from now too.
None of this has to do with the amount of oil in the ground, which is substantial. Yes, it will cost more than the $5 to $10 per barrel that the easy to recover oil costs now, but technology marches on and oil companies will find a way to recover harder to reach supplies more cost effectively. And yes, eventually the stuff will run out, but not in my lifetime.
In the meantime, oil appears to have topped. And, should the U.S. economy slide into a recession dragging the global economy with it, then $50 oil will be back. Then you load up on XOM in anticipation of the economic recovery.
# posted by : 12:08 PM
: 12:08 PM
Here is an interesting presentation on world oil supplies from a professor at Radford University in Virginia.
http://www.radford.edu/~wkovarik/oil/index2.html
http://www.radford.edu/~wkovarik/oil/index2.html
# posted by : 12:36 PM
: 12:36 PM
Call me crazy but I think you did a great job Kid. I would offer this suggestion though, make the charts clickable so I can fucking see a bigger chart, squinting gives me a headache and as much meth/monster as I do its hard to concentrate.
I disagree with a few things though in the analysis, the dollar is obviously going to zero which will send oil higher. The Fed will cut rates thus cutting the dollar. The Chinese will sell our dollar as well sending it lower. Iran is a fucktard and will do something stupid because that is what those dirty arabs do. So I think oil will go up and the dollar down. Now Eric Bolling thinks oil is going down since he was obviously short, he got steamrolled.
Anyway enough of my jabbering, good job dude, I vote you stay (atleast today). Goddamit that's a big ass fish.
I disagree with a few things though in the analysis, the dollar is obviously going to zero which will send oil higher. The Fed will cut rates thus cutting the dollar. The Chinese will sell our dollar as well sending it lower. Iran is a fucktard and will do something stupid because that is what those dirty arabs do. So I think oil will go up and the dollar down. Now Eric Bolling thinks oil is going down since he was obviously short, he got steamrolled.
Anyway enough of my jabbering, good job dude, I vote you stay (atleast today). Goddamit that's a big ass fish.
# posted by : 1:22 PM
: 1:22 PM
Thanks gapping.
If anyone who can direct me on how to make my charts bigger please send me an email which can be found on my profile.
47 pound striper - their season starts in a few weeks. My fucking motor wouldn't start at the launch this morning...ugh.
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If anyone who can direct me on how to make my charts bigger please send me an email which can be found on my profile.
47 pound striper - their season starts in a few weeks. My fucking motor wouldn't start at the launch this morning...ugh.
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