While the technicals are good for OIH, and I think that 130 is a good entry (if it looks to bounce there), I would rather focus in on NAT GAS. Not the best timing on oil in my opinion, but I think that about a month from now, nat gas companies will start looking better. Personally I think that XLE @ 50 is also a good entry and might take better advantage of rising energy costs during the cold months. If XLE gets down to around 50 during the next month or so, then I will be looking at it. If anyone would like to play it before then, look for a bounce at 54. An 50/55 bull put will do nicely, as would some DEC calls. Take profits at 56.
Well, today offered the entry (which I missed of course), and it looks like a follow through is on the cards.
Bringing this thread back to life.... Seeing as Cache and others enjoy the occasional pie in the sky market prediction antics, I'll make a small contribution for your entertainment. It will be worth exactly as much as you paid for it: It seems possible that the final "third" of the rally i.e. the "dumb money" phase has come to an end and thus the rally as a whole shares that fate. The dumb money that joined the rally after the 12th (my earlier post) and accumulated as the smart money distributed have had virtually all of their gains wiped out as to be expected... Further distribution to take place as the greedy dumb money try to buy this dip in order to make up for missing the last rally! In short, some consolidation to take place. At some point, do we then try for a second rally? Do we go for a double top? Time will tell. Currently the reading from www.momoneyscrystalball.com is a projection of sideways markets of the kind we all enjoyed from yesteryear. The bold prediction eminating forth is that we will remain in an SPX 1365 +/- 25 points range till the end of the year! Does that seem likely given a 10 point move in one day is not uncommon? No MoMoney.
Yeah baby!!! You know how I love meaningless predictions. Seriously though I am in agreement, but I do think that this rally has a bit more left in it. I'm looking for a double top toward the end of this month.
Very interesting post MO...that was exactly my thought that the SPX would just muck about for the next couple of months based on the recent poor showings of the GDP and ISM as well as a loss of confidence in current US leadership. However I've been thinking a lot about "dumb" money and honestly most of the people I know who have money to invest and don't follow the markets closely put their money to work in mutual funds or with money managers and don't even try to follow the markets or chase stocks....so who really is the "dumb" money? edit...AND YOU have WAAYYYY too much time on your hands
Arguably, some mutual funds would qualify as not being too smart LOL. I suspect your friends and acquaintances are not representative of the "quick buck" herd. None of earlier statements are meant to imply that I am any less dumb myself MoMoney.
RR, When speaking of "dumb money" there are a few big sources that I am familiar with from advising. Individual investors actively reallocate their money across different mutual funds. These days there are a ton of people who somewhat actively manage their own portfolio due to recent efforts of firms like Chuck Schwab. Some manage a personal IRA while others do it through a 401K, and some just have a cash account with a broker like CS, Scottrade, or Ameritrade. Anyway, these people are notorious for jumping on the end of a trend. A bunch of people pulled their 401K out of stocks last June during that bear trap. They just move their money into a money market fund or other ultraconservative investment. By the time SEP came around they were already mad that they didn't hold on, but the market must be hitting a top again. Right? Then by mid OCT they are sick of hearing how much money their neighbor is making in stocks and how we are in "blue sky" territory and the economy is in great shape. Finally they access their 401K or IRA and move their monay back into stocks. Generally speaking, mutual funds try to keep a certain amount in cash to handle withdrawls. Recently however, mutual fund managers have had very low levels of cash, meaning that they are over committed by industry standards. They also get pressure to make money during these rallies, but they are pretty quick to sell off losing positions right now because it is the end of the year and they need to get back to their 5-7% cash basis. So the money flowing in from individuals hasn't been maintaining proper allocation. A couple things to notice are the flow of money out of gold and silver in SEP, as well as the flow of money out of bonds during OCT. These are safe havens in times of uncertainty, and both have picked up recently. {edit} I'm with Mo in that I'm not sure that I'm not dumb money also.
thanks Cache, I have to agree about how people do shift in and out. (of mutual funds) Last statement tho are you saying people are pulling money out of bonds/metals now? (because of uncertainty?) Or are they just re-allocating?
No, people are moving money back into bonds/metals because of uncertainty. Money started moving in the week of OCT 16, and then on a more serious level the week of OCT 23. Presumably, this is the period where the smart money was providing sellers for the dumb money moving into the stock market.