Oil has put in a near term bottom. While most analysts are insanely bearish, the charts and cycle work confirm it. The upside target is $38.00-$40.00 per bbl. The price action in oil has changed dramatically in the last few weeks. Bearish oil inventory reports have initially caused a quick sell off, only to reverse and squeeze the price higher. When you see this type of price action at the lows, it is an extremely bullish signal. Simply put, it means institutional money is buying the dips now. Of course they will not tell you that, but the money flow proves it.
With 20% upside in oil, many beaten down oil stocks will see dramatic squeezes. You can see the squeeze taking place already on names like Freeport-McMoRan Inc (NYSE:FCX). Freeport is already up over 50 its recent lows and saw as much as a 24% gain today before pulling back. So what are other names that should see a squeeze if oil is to climb another 20%? Companies like Seadrill Ltd (NYSE:SDRL), Kinder Morgan Inc (NYSE:KMI), Transocean LTD(NYSE:RIG) and Chesapeake Energy Corporation (NYSE:CHK).
Every one of these names is loaded to the top with shorts. An oil price near $40 would cause massive short covering. These stocks probably have 30-50% upside potential if (and only if) oil spikes close to $40.00.
Oil is bouncing off the $40 per barrel level again. This is the third time it has hit this level and bounced. In terms of technical support, this would be known as major support level. One interesting factor that should be noted as well, in August 2015, oil saw the high thirties briefly. This low remains intact and has not yet been violated. As long as oil holds the $38.25 pivot low, oil stocks should be looked at as long term bargain investments. [more]
The NASDAQ 100 is at a major pivot point on the charts. Based on where we close today (above/below), will determine whether the technology stocks bounce or collapse lower. Should the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) close below the trend line revealed in the chart below, the downside target is $109.85 within days. Remember, this level is important only on a closing basis. Intra day it means nothing. In other words, we are below during lunch today, but can they, will they rally it back above by the market close today at 4pm ET. [more]
After Friday's Non Farm Payrolls shows an increase of 271,000 jobs, almost all economists are expecting a the Federal Reserve to hike interest rates in December. In addition, hourly income jumped a bigger than expected 0.4%. While all this news sounds like the U.S. economy is roaring ahead, there are troubling signals yet unexplained. A major concern should be performance of many major retailers such as Target Corporation (NYSE:TGT), Kohl's Corporation (NYSE:KSS) and Macy's, Inc. (NYSE:M). These are major retailers, generating a majority of their sales in the United States. The reason 'U.S. sales' are stressed here and under performing Wal-Mart Stores, Inc. (NYSE:WMT) was excluded, is because they have a ton of sales outside of the country, thus the currency issue is the major issue hurting them. What is important is the price action of retailers that generate a majority of their sales in the U.S. Target Corporation (NYSE:TGT), Kohl's Corporation (NYSE:KSS) and Macy's, Inc. (NYSE:M) all do that and their stock performance is horrid. Something is very wrong. [more]
Most analysts are still predicting $20-$30 per barrel oil within months (NYSEARCA:USO). As oil falls today, the charts just simply do not show another 50% downside in the next few months. In fact, the fundamentals are showing downside less and less as well. As more and more rigs go offline in the United States, oil production is coming down. In addition, continued stimulus by China and Europe and a 'stable' U.S economy does not show a dramatic decline for crude demand on the horizon. The supply demand curve is easy to read and it is predicting a stable to higher price on crude. [more]