Wednesday Nov 6, 2019

XLE Energy ETF

Energy bottomed in August an  October. This assets up a final low on the uptrending blue line later this month.

We are thinking this will be a major opportunity for a low risk entry into energy markets.

Stock markets overall despite the outburst of positive headlines are a few hundred points over resistance at  DJIA 26,400.

Stocks are likely making a first high now and then a secondary in various indices mid month, then look for a bit of pullback.

 

Weekend Nov 2. 2019

Weekly Column published this wee

Too Much of a Good Thing?

 

Thursday Oct 31 2019, 10 00 AM CST

 

The Permian Basin economy declined for the sixth month in a row.

Karr Ingham, InghamEcon LLC

 

Almost half of the US fracking firepower is expected to be sitting idle within weeks. In the previous slumps, frackers parked equipment waiting for an upturn. This time it is different, equipment is being stripped for parts or sold for scrap.

Fracking Equipment Being Sent to the Junkyard, Bloomberg News

 

And that readers is precisely the kind of headline that accompanies a bottom in oil prices. Benchmark Patterson and RPC are retiring pumping units. Well no wonder the firms are trading below book value.

 

Transocean RIG is scrapping rigs that cost billions to build. No wonder it trades at 20% of book value.

 

Infill founder Joeph Triepke announces there is too much of everything from horsepower to sand.

 

In Odessa everything is being stacked from pipe to rigs to sand haul trucks.

 

Social Mood maxes out at the top and bottom of markets. The most intense mood occurs then. That results in comments like this one in the Bloomberg Article.

 

And next year does not look much brighter.

 

We’ll need to see oodles and oodles more attrition from other pumpers to clean up this market absent a notable demand boost.

Tudor Pickering

 

All of this is typical of conventional economic analysis. Economists tend to think in linear fashion. At bottoms there is nothing but an endless trend extending as Buzz Lightyear would way, to Infinity and Beyond.

 

The Philadelphia Oil Service Index is down after rallying some eight points (61-68) this month.   The XES has also turned down again. FRAK has turned down in price.

After brief rallies, Patterson and Transocean have pulled back as well.

 

However the S & P Energy Sector Bullish Percent Index is above its August low of 20 now trading at 46.

 

I may be early but for now this looks like an energy low is in the making for the last quarter   of 2019.

 

The US Economy registered a gain of 19% for the third quarter. Trump’s trade policies are to blame. The FED has lowered its overnight rate to 1.75%. The ten year Treasury trades at a 1..8% yield. What is the FED going to do if the economy in fact does sour a bit? Trump has what he asked for. He had better make the best of it and wrap up a few trade deals, declaring victory going into the 2020 campaign.

 

Yes the S & P hit a new high but rally and the Dow Industrials are a few points above the recent year-long trading range.   Uncertainties include trade, impeachment, interest rates, world social unrest (even Chile has joined the fray), and finally the election itself. Stock market momentum is up but it may be slow going in the election year.

Dawson Geophysical

Too Much of a Good Thing?

 

Thursday Oct 31 2019, 10 00 AM CST

 

The Permian Basin economy declined for the sixth month in a row.

Karr Ingham, InghamEcon LLC

 

Almost half of the US fracking firepower is expected to be sitting idle within weeks. In the previous slumps, frackers parked equipment waiting for an upturn. This time it is different, equipment is being stripped for parts or sold for scrap.

Fracking Equipment Being Sent to the Junkyard, Bloomberg News

 

And that readers is precisely the kind of headline that accompanies a bottom in oil prices. Benchmark Patterson and RPC are retiring pumping units. Well no wonder the firms are trading below book value.

 

Transocean RIG is scrapping rigs that cost billions to build. No wonder it trades at 20% of book value.

 

Infill founder Joeph Triepke announces there is too much of everything from horsepower to sand.

 

In Odessa everything is being stacked from pipe to rigs to sand haul trucks.

 

Social Mood maxes out at the top and bottom of markets. The most intense mood occurs then. That results in comments like this one in the Bloomberg Article.

 

And next year does not look much brighter.

 

We’ll need to see oodles and oodles more attrition from other pumpers to clean up this market absent a notable demand boost.

Tudor Pickering

 

All of this is typical of conventional economic analysis. Economists tend to think in linear fashion. At bottoms there is nothing but an endless trend extending as Buzz Lightyear would way, to Infinity and Beyond.

 

The Philadelphia Oil Service Index is down after rallying some eight points (61-68) this month.   The XES has also turned down again. FRAK has turned down in price.

After brief rallies, Patterson and Transocean have pulled back as well.

 

However the S & P Energy Sector Bullish Percent Index is above its August low of 20 now trading at 46.

 

I may be early but for now this looks like an energy low is in the making for the last quarter   of 2019.

 

The US Economy registered a gain of 19% for the third quarter. Trump’s trade policies are to blame. The FED has lowered its overnight rate to 1.75%. The ten year Treasury trades at a 1..8% yield. What is the FED going to do if the economy in fact does sour a bit? Trump has what he asked for. He had better make the best of it and wrap up a few trade deals, declaring victory going into the 2020 campaign.

 

Yes the S & P hit a new high but rally and the Dow Industrials are a few points above the recent year-long trading range.   Uncertainties include trade, impeachment, interest rates, world social unrest (even Chile has joined the fray), and finally the election itself. Stock market momentum is up but it may be slow going in the election year.

Dawson Geophysical

Here is a good example of what will probably happen across the board to energy service stocks.  Weekly charts are much m,ore important than daily charts.

Moving Average Convergence Divergence in  the lower panel took off in July.

Price has finally reversed and moving averages are turning up.

At top relative strength has clearly turned up.

Lows in markets happen amidst the worst possible news. And typically economists only see the linear trend extending forever.

Economists rely on historic data to extrapolate future trends. That is not the case for socionomics.  Socio recognizes changes in mood via the sociometer of the stock market to predict future change.

 

 

Monday Oct 28, 2019

Grub hub (symbol GRUB)

shares fell 20% on disappointing earnings.

GRUB follows a fairly typical pattern of the shares bid to a high price on near no earnings

Seems to me that food delivery works with say pizza if the customer is within a couple of miles of the pizza restaurant, otherwise, uh maybe not. the move from  30 to  15 was parabolic, and  those kind of moon shots usually reverse in a swoon to the downside, here we go again.

Thursday Oct 24 2019

Let’s Get Serious About Senator Warren

 

Biden 21, Warren 28, Sanders 15, Buttigieg 10, Harris 5, Yang 1, O’Rourke 1,

Klobuchar 3, Booker 1, Gabbard 1, Steyer 1, Castro 1, Bennet 0

 

Real Clear Politics latest poll numbers today

 

Biden’s early lead is evaporating and let’s face it, the hard Democrat left never really wanted him. He spent one million dollars on private jets in just one quarter. Sanders had a hear attack and has likely seen his best numbers.   None of the rest are anywhere close to Warren. Warren is the best organized and is emerging as the probable candidate.

 

And she is hiring a Texas campaign manager.   This is hard to imagine in the state that has almost single handedly made the USA the lead energy exporter in the world.

 

Elizabeth Warren has promised to ban fracking on her first day in office. I suspect that would create lots of lawsuits but in the mean time the entire energy industry would face the wrath of the EPA (remember the Obama EPA staffer who promised to crucify energy producers?).

 

Her ‘everything is free campaign’, college, health care, child care, will no doubt appeal to the ten million plus female single, no matter how unrealistic the math. Would Texas vote to wreck its own economy?

 

Karl Rove points out that 350,000 Texans work in oil and gas. Another 100,000 work in refineries. And then there are the support folks in restaurants and repair shops. The State of Texas received $14 billion in state and local taxes and royalties. School districts took in $1.2 billion and counties collected $366 million.

 

As I write California Governor Gavin Newsom blames oil companies for his state’s $4+ gasoline, about twice what Texans pay. Requiring special grades unique to California is the real reason.   But progressives like Newsom and Warren are never satisfied.

 

The clean up in auto emissions was not enough. I see estimates that if Warren got her way, oil might reach $150, and no telling where natural gas might soar. Worse we would lose the long sought energy independence we now finally enjoy. And then there are the billion dollar export terminals along the Gulf which would sit idle.

 

Trains, planes, and ocean going ships do not travel on renewable energy. The promise to rid us of fossil fuels in ten years is a pipe dream but a Warren candidacy is not. Plan to get out and vote.

 

Meanwhile the price of oil is firming at the mid 50s. energy service shares are down hard again today. We remain focused on a mid-November low in share prices.   It may be the market is anticipating a strong Warren threat to the energy industry.

 

http://www.themarketperspective.com