Oil Stocks seeing little near term hope of a reversal

Feb 10th, 2016 – Comment

Sad state of affairs in the energy sector


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou,

Listen to you everyday on AM 640 looking for some info on purchasing oil stocks.

John

 

Hey John,

 

Thanks for the assignment and listening to AM640. Your request comes on the heels of a request from Adam for an evaluation of the crude oil market. On February 05, 2016 I published an analysis of $WTIC which I encourage you to review as part of your decision making process. Another point that I want to make is that the search for oil stocks covers a wide landscape.

There are integrated companies that explore for reserves, refine the crude oil, and sell gasoline through a network of retail stations. In addition you might want to consider small and mid cap producers, pipeline companies, trucking companies, as well as other service companies..

I will examine the S&P TSX Capped Energy Index (SPTEN TSX) as a point of departure. There are 44 companies in the index with the largest having a market cap of $39.12 billion and the smallest with $261 million. You should take a look at each of the companies in the index to see which ones fit your investor profile. Here is a link that will provide more information on the index.:

http://web.tmxmoney.com/indices.php?section=tsxc&index=^TTEN#indexInfo

 

A probe of the charts will help you begin the process of preparing for your bottom fishing expedition.

 

$SPTEN

The three-year chart exhibits many of the same patterns we have seen many times when looking at individual energy stocks. A top in June of 2014 followed by a steady decline. In this case SPTEN breached the 50-day moving average in July followed by a break below the 200-day moving average in September. A death cross formed in mid October of 2014 leading to the lows touched in January of 2016.

 

 

 

 

$SPTEN2

The six-month chart pulls into focus the bounce off the lows in January as the MACD and the RSI generated buy signals. Make note of the resistance along the 50-day moving average that stopped the advance in its tracks as we came into the later part of the month.

At this time there are no patterns to indicate that we can expect a trend reversal in the near term. To your question as how to purchase oil stocks I would say carefully and in time not at this time.

 

Next time I will audit the charts for Pollard Banknote Limited (PBL TSX) for Mario.

 

 

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