Anyone else annoyed how oil stocks keep rising when it should be going down? Who is trying to hide out in here, thinking he (or she) can ride out the storm in these overbought ogres. IMO can't be smart money, because smart money has never in history bought at tops. I have a hard time believing it is smart money buying AFTER oil companies have had unprecedented profits.
Hypothesis: Oil stocks must get smacked down hard. I have some fundamental reasons. First is that I anticipate economy to slow close to recession levels by end of 2007 or early 2008. Oil is a function of the strength of economies and consumer spending, and a weak econ = weak energy prices. It is difficult to envision housing down and energy prices up, because demand for energy must fall as spending power falls. I also anticipate unemployment to creep up. Other supporting reasons are: statistical storm season has peaked; big oil men (& woman) leaving office; ethanol glut play on refiners; and negative sentiment against petrol, alternative energies are "in". High energy prices do not just affect the US but the world. There is large political pressure from all nations against high oil prices. Governments have a history of intervention in the commodity markets. IMO, these are fundamentals that the market is not truly considering at this time, but they will soon. You also have to consider who is buying at this time. Peak oil speculation and momo investing (buy today because it went up yesterday). People looking at the Weather Channel and praying for a hurricane. This doesn't seem like smart money flow, imo.
OK market finally coming to its senses. Now those crazy oil stocks can get bitchslapped down into the next dimension where they belong. They got the #1 oil bull to come out and pump oil on cnbc. Soon the highlevel government officials have to announce that the economy is sound. If I had a billion as soon as they say that I'd hit the sell macro all the way down.
OIH down over -5%... HAL -6% SII -10% RIG -5% VLO -4% everything down. My only regret is not having enough money in this play.