Investment Markets Info.

Energy suffers big setback

The energy sector has suffered a big setback as oil and gasoline have dropped significantly over the past five months. Since June peaks, oil has lost 29% and gasoline 2.5%.

Drilling programs will continue to be cancelled as the top line has eroded substantially in a relatively short time. The impact on drilling service firms will increase over the course of the winter drilling period. The Canadian dollar has lost 5.85% since the peak in energy prices.

In the stock market, the losses in the previously strong energy sector are bearish. The implication is they may trade range bound in a continuing state of weakness with increasing disinterest as the ability to make money is proven to be low.

Natural gas staged a strong advance from the late October shake out. However, the past five sessions have ruined the emergence of bullish action. Natural gas is shown in the third chart below, following oil (West Texas Crude) and gasoline.

Sell indications were provided on energy markets as well as other commodities. This keeps investors out of weak markets that do not have predictability on how extreme they may be. Following the systematic signals, frees up capital to be placed elsewhere in markets and securities with evidence big investors are favouring those areas. 

Natural Gas

Natural gas blasts higher

Natural gas is up for the eleventh straight day, advancing approx. 24% from the Oct. 24th low. Nice gain in a hot market, but the action was effectively unpredictable.

When the market recovered to the low, at approx. $3.75, a buy could have been made. A buy could also have been made based on the gap higher, at $4.00. You can see it in the first chart below. But executing the buy in real time didn't imply natural gas would continue to rip higher with daily gains.

Natural gas is, by nature, a market prone to wide swings on both a short and intermediate term basis. Like most commodity markets, it is immersed in a deep and long correction. The recent advance is nice for those who were in it, but there is a big difference between being lucky and smart in the financial markets especially natural gas.

 

Use the markets analysis with guidance for decision making in stocks, bonds, commodities and currencies.

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Commentary including ideas, historical and other market indications are not investment advice. Statistics and other data may be from other sources and may be inaccurate or incomplete. See Full Disclaimer.

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