Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

Just the Facts, Ma’am

Oil rises 5% to $31.45, and the corks are popped and the market is off on a tear. Hooray! We’ve been saved!!! Really? What’s really going on?

“According to the law firm Haynes and Boone, 42 oil exploration and production companies went bankrupt in 2015. The cumulative debt of these companies was $17 billion. Another six firms have already filed for bankruptcy this year. Consulting firm Deloitte says a third of the world’s publicly traded oil companies are at a high risk of going bankrupt in 2016. The 175 companies most at risk have more than $150 billion of debt. The problem, of course, is that the world has too much oil. Oil trades for around $30 a barrel. And oil producers are falling into a parade of bankruptcies.” All emphasis mine

‘Nuff said? Folks, $30 oil is going to bring down an incredible house of cards built upon energy sector bad debt. Period. If you want to trust statements from Russia, Saudi Arabia, Iran and the rest of those cut-throat thieves, you just go right ahead. I’ll just put this out there right now. They’re not going to cut production; they won’t. Whenever the next round of supply and storage reports comes out, they’re going to say it again; there’s too much oil, and the price will fall back… again. I don’t know when those next reports will come out… I don’t even care. I’ll just watch the market. It will tell us, or the lack of faith and trust will be revived, and it will begin to slip back on its own, before the evidence is revealed.

This is, as best I am able to determine, a rally in a new Bear Market. It’s going to fake a great many people out into believing the Bull has been revived… and my guess is that the really smart are going to sell the heck out of it. I’d tell anyone concerned for their capital to seriously consider doing the same.

So, let me see. Volume was barely more than the previous 2 days, and has yet to exceed the down day volume spike of 2/11. Not much conviction there. We’re approaching its 50-day moving average. Will it slice right on thru, or get caught up in the selling of overhead resistance. The EPS line fell by another penny again today, for a total haircut of 7.1% so far in 2016. I know my data gets to me about a week and a half after it’s generated, so if Wall Street knows anything different…it’s not yet reflected in that data I view each day.

Here’s to your successful investing,
Harold F Crowell


3 thoughts on “Just the Facts, Ma’am

  1. Donald Dickey says:

    Good Morning Harold, with your downward bias to the market are you aggressively selling covered calls on the stocks you own?

    • No, recent sales were in accounts with no such authorization… and, in the one account we sold out, it had all the authorization, but we wanted to take the proceeds of all that account for other immediate uses. Harold

  2. Richard Jones says:

    Good Morning Harold … good to see you got some sleep last evening … great summary commentary on the Oil/Commodity trade on the news vs the underlying fundamentals ie the would is swimming in low cost energy at the moment … challenge and certainly area of longer range, investment vs trading research to me is historically lower energy costs spurs growth. Certainly the massive speed bump you have outlined ie the re-balance that is starting to work its way through US and global energy exploration and upstream producers via bankruptcy and mergers is a very large concern in the intermediate term but longer term the lower cost for longer/much longer should be a net positive unless you live in countries that rely on commodity revenue to fund tax and or living standards. One challenge I do see in the US is that it presently looks like the energy savings at the pocket book level is finding its way into consumer discretionary ie eating out and of much more of a concern is the unsustainable growth in the fully loaded cost of healthcare. I see Marketwatch has flagged Jim Stacks bearishness this morning, a market pundit adviser I have respected for years. On another note for the trader, energy players in the midstream and downstream are either still value traps or as Buffet, Tepper, Saros etc are hitting or approaching bottom.
    Catch yah later … the momentum investing advisors/systems VectorVest and Investors Business Daily are pontificating “Uptrends” .. but then again this whiplash consensus has been a bit of the death of a thousand cuts over the past 18 months of market activity

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