Tuesday, March 31, 2009

Is Energy The Place To Be?

I think so. I am looking at several charts that tell me energy could have another move up. I think NOV could get a nice bounce. I plan to buy it today with a tight stop below 29.40. Many are saying that you can't buy oil under $50--as that is a huge psychological barrier. I disagree, I think we are headed for inflation and many are going to be shocked at the pace of the ascent of oil prices.

We still have a lot of headline risk in these markets. No doubt the markets do not like to hear about more government control. In my opinion, General Motors is most certainly headed for bankruptcy--and that will ultimately be good in the eyes of the market. The more the agony is prolonged---the more headline risk we incur in this market.

I heard from the deflation camp yesterday as oil and gold prices came under pressure. You deflation believers just keep pumping your money into shorts on the oil prices and it will ultimately lower my entry point and make my longs even more profitable. I was in Dallas this weekend and there were restaurants where I had to wait quite some time for a table. Now I admit that the economy has been slow, but it has far from stopped. My point is that when we do get rolling again, you will see rapid growth in the money multiplier. The multiplier will cause rampant inflation. I like the oil trade even better than gold as a hedge against inflation.

One of my favorites FCX got hammered yesterday after a nice run. I think it provided a great entry point near the 20ma. I will look to buy it today with a tight stop. With the Bears coming back out of the woodwork, I am amazed that I am finding more longs than shorts with my chart scans. I am still surprisingly bullish. Cautiously bullish with tight stops would be a better description. I think we have so much headline risk and you must protect yourself.
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