Investing

is now the time to invest in oil stocks?

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Sr. Member
Jul 17, 2013
584 posts
94 upvotes
Greenwich, CT
rodbarc wrote: A trading strategy based on technical analysis combined with fundamentals can be powerful and keep you ahead of the benchmark. Mojena.com and imarketsignals.com are just two examples of it. For short term goals, which trading is about, it's certainly useful.

Rod

I believe technical analysis should be combined with economic analysis to drive your view on macro themes.
News and fundamentals should drive the timing of buys/sells on individual stocks.

Trading is hit-and-miss at best for most people. Again, you simply CANNOT outperform a computer except through intepretation. The trading houses have an inherent advantage in that they will flag all the signals earlier.
Over the long run, you will lose to both the long-term investor and the professional trader unless you are (1) lucky or (2) able to derive your own unique algorithm.
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Dec 14, 2010
6283 posts
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TranscendentExp wrote: I believe technical analysis should be combined with economic analysis to drive your view on macro themes.
News and fundamentals should drive the timing of buys/sells on individual stocks.

Trading is hit-and-miss at best for most people. Again, you simply CANNOT outperform a computer except through intepretation. The trading houses have an inherent advantage in that they will flag all the signals earlier.
Over the long run, you will lose to both the long-term investor and the professional trader unless you are (1) lucky or (2) able to derive your own unique algorithm.
We're on the same page, that's what I meant with technical analysis + fundamentals.

Rod
Deal Addict
Aug 12, 2004
4469 posts
2119 upvotes
Calgary
For all the ones talking about Technnical Analysis ad nauseum, you may have already missed the boat if you blinked. What some might see as a false bottom this week, I see as a strong indicator that the worst at least technically has past. It is not a coincidence that most oil stocks went up today. Shorts are covering because the deluge of bad news has slowed down, and the continued sell off which was present for the last while has not happened, even after the expiration of futures on Wednesday (the false bump up in oil price). Is it finally rosy out there? Of course not. Heck we may still have a small recession on our hands. But there were some clear reversal signs this week that have not shown itself in over 5 months.

http://www.platts.com/latest-news/oil/n ... r-21842510

[QUOTE]"It was short-covering madness," said Price Futures Group analyst Phil Flynn, noting the NYMEX February options expired Wednesday.

"A lot of people were hoping for a sell-off until the last few minutes, but it didn't come," he said.[/QUOTE]

It is not a coincidence that stocks like Suncor have seemingly done good of late. I firmly posted a few days ago that most companies are clear buys right now (did earlier also but that there was still potential to drop), that the situation has clearly gone to the other extreme. Where was the bottom? Judge for yourself. Sometimes it is not clear until a few more weeks have past, but I think it is clear in this situation.

http://www.google.ca/finance?cid=683543

Take a look at Suncor more closely. They just announced that they will cut 1000 jobs. Surely that is bad news right? Take a closer look here, specifically December 19.

https://ca.finance.yahoo.com/q/hp?s=SU.TO

Dec 19, 2014 36.40 37.16 36.10 36.10 14,668,900 36.10

Clearly way abnormal volume, yet no price movement. Short covering? Insider buying? For every seller there is a buyer. Most companies have certain days of the year allocated to when employees can purchase. Clearly though, this day was was abnormal. Someone was clearly buying. Smart money was buying. Check other companies and you will see a similar pattern.

But Firebot! Surely this is merely a coincidence.

Let's look at another stock. Cenovus

http://www.google.ca/finance?cid=12868217

Can anyone spot the highest volume day? Anyone?

What about Crecent Point?

http://www.google.ca/finance?q=TSE%3ACP ... iALrt4CYBQ

December 19 again? What is going on!

Husky?

http://www.google.ca/finance?cid=665858

December 19 ;) .

Several big investors are already back in, right under your noses, on a seemingly meaningless day. Oil prices slid more that day, and movement was non existent.

Now, will stocks suddenly jump back to prices from 8 months ago? No.

I predict Monday to have oil prices go down again, maybe even Tuesday, but the end of next week we will back up again ever so slightly. in the meantimes, most bigger oil companies will have slowly crept up just a little bit more.

By the time the 2009 recession was getting in full swing, the stock market was already in the recovery phase. This is what is being seen here.

Sure I may be wrong, but I was right on many other occasions including the real estate situation in 2012, despite the rabid belief on these boards that real estate was in the middle of crashing.
Sr. Member
Jul 17, 2013
584 posts
94 upvotes
Greenwich, CT
Firebot wrote: For all the ones talking about Technnical Analysis ad nauseum, you may have already missed the boat if you blinked. What some might see as a false bottom this week, I see as a strong indicator that the worst at least technically has past. It is not a coincidence that most oil stocks went up today. Shorts are covering because the deluge of bad news has slowed down, and the continued sell off which was present for the last while has not happened, even after the expiration of futures on Wednesday (the false bump up in oil price). Is it finally rosy out there? Of course not. Heck we may still have a small recession on our hands. But there were some clear reversal signs this week that have not shown itself in over 5 months.
I guess it had nothing to do with the IEA report.
Deal Addict
Aug 12, 2004
4469 posts
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Calgary
TranscendentExp wrote: I guess it had nothing to do with the IEA report.
It has more to do with change of sentiment than a report, but yes the report is the first decent public sign in months. Oil prices and stocks rising over 5% in one day goes a little further than one report though. if you need a report telling you that companies are cutting production growth expectations in 2015 due to oil prices, than you are welcome to buy after everyone is already in. The only thing different from this report versus December is a slight change in outlook of production growth. Demand growth is still seen the same. Stock wise, most oil companies hit the bottom in early December. Prices of oil have gone down an extra 10-15$ since with little change downward for these companies, most have gone up since.

Note the price movement today happened on relatvely low volume. The bigger players are already in and ready for the long term, what you saw today was a panic on the short side. This is what I am pointing out.
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Jun 22, 2012
4737 posts
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Shhanada
dlhunter wrote: yeah, lets be clear: I do trade, meaning I am looking to get in/out within 0-6 months.
TA is used for short term, fundamentals for long term.

when I have enough capital, I might just buy and hold and enhance my returns with certain option plays. But majority of "investors" asking questions on this board have only limited funds (5000 or less).

Nobody knows the future and doesn't matter how strong the fundamentals if some outside event can take down entire sector. Tomorrow, xiaomi or other firm can introduce completely new device rendering iPhone useless. AAPL investors will not like it, and everything will change.
Except not really. You may not realize, but Xiaomi DID release a flagship product this week, and it didn't "render iPhone useless". The damage was about 3%. Even if aliens drop an iPhone killer or a miracle fossil fuel replacement, there's plenty of inherent momentum and usefulness in various products and industries to protect them for a long time. One needs only see the continued life of Blackberry and AOL to find proof.
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Jun 22, 2012
4737 posts
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Shhanada
TranscendentExp wrote: The question is, then, whether you follow that technical analysis without fail or whether you will make a judgment call at times and ignore the signals.
If you only rely on technical analysis at times, then you are not a technical trader as you stated.

And it's a proven fact that widely used algorithms don't work for trading. It may sometimes provide a good entry or exit point, but this is for investing rather than trading. You HAVE to ignore many of the technical buy/sell signals in between your own buy and sell.

Here's the logic:
-Algorithms that dominate the market are run by computers.
-For this reason, you will ALWAYS be a little behind.
-The market over the long-term trends up due to growth and inflation.
-If you are always a little behind and the trend is upwards, you will lose out on more gains than you will save on losses.

Again, this is a proven fact. All traders know this. In order to beat the market, you have to, as a technical trader, pick the right combination of signals for your own algorithm and then program it into a computer. Most of these algorithms are complete crap. The ones that do work and picked up in fairly short order then it just reflects market movement and doesn't work anymore.

Sell side analysts, the only ones you will see reports from, don't use technical signals at all, so it makes zero sense for you to cite analyst sentiment when you're trying to back up the merits of technical analysis.
For a long time I tried to figure out if TA was real or voodoo. Then I realized it doesn't matter whether it is voodoo or not, or whether I think it's voodoo or not. The mere fact that enough influential players believe in it that markets can be moved is sufficient.
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Jun 22, 2012
4737 posts
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Shhanada
dlhunter wrote: there is no conspiracy, Firebot. Dec 19 was last trading day BEFORE the Holidays. It's not a big secret most funds/traders take a break and volume is significantly lower.

now, regarding oil trades. CL contract is massive with huge leverage. 1 point is worth 1000 dollars. Traders got short in a whole (meaning, beyong reason/fair value). When most traders take one side and already in a position, there are no sellers behind them and trade needs to rebalance. This is what caused short covering... Perfectly in sync with the link you posted. But then the bounce got sold into very hard, almost hitting the lows again... I think long traders will be tested by a short price dip below the lows to shake weak hands, then real bounce will start.

As to finding value in big oil companies - if I buy, only for short term. I think this is NOT the bottom, nobody got broke yet. Most players have hedges from $90 and those hedges expiring Q1 2015. Price of oil will not move much higher until production is decreased - this was made clear by Saudis.
Not doing to disagree. But I will point out that even if oil doesn't actually move, when a consensus starts forming that it's more likely to be up in the future instead of down, a line forms not unlike RFD members camping out at Best Buy for Boxing Day. Even though they know the wait may be long and cold, the do it on the faith that getting in the line early is beneficial. Same with oil, some (me) may be lining up now even though we suspect the line may not be moving any time soon.
Member
Nov 8, 2009
455 posts
157 upvotes
TranscendentExp wrote: I believe technical analysis should be combined with economic analysis to drive your view on macro themes.
News and fundamentals should drive the timing of buys/sells on individual stocks.

Trading is hit-and-miss at best for most people. Again, you simply CANNOT outperform a computer except through intepretation. The trading houses have an inherent advantage in that they will flag all the signals earlier.
Over the long run, you will lose to both the long-term investor and the professional trader unless you are (1) lucky or (2) able to derive your own unique algorithm.
Let me be clear here that I don't use vast majority of technical signals. One of the best ones that I rely on are trendlines. You can't tell me that trendlines are not incredibly powerful signals as almost 95% of the time a stock will usually bounce off an established trendline in a upwards market. When a stock breaks it's upward trendline it has a nasty habit of staying at much lower prices for an unforeseeable period of time. That would be a good moment to sell. As for the signals of timing a breakout or what not I try not to put too much emphasis on them as it's not important for when I decide to buy. I understand your points about algorithms and what not but trendlines do not rely on algorithms and so is a mute point.
Member
Nov 8, 2009
455 posts
157 upvotes
gwplant wrote: This...again.
Not sure what your trying to prove here. The fact that it's moved higher even though oil has gotten lower? First of all it's the only name of all the energy names that has moved higher although I suspect it won't be the only one. So thanks for cherry picking the best example. Second of all, people are believing the company that the dividend won't get cut which it very well may not. Depending on how long oil stays low I'm not sure that CPG can still maintain that dividend and when it is cut you can expect the stock to tank. If I were to buy an energy name at this point I'd probably want one that has a very low dividend because the market hasn't discounted CPG as much as the other energy names. If oil stays low (sub 50 range) for a year CPG will likely cut and the stock will likely fare worse than other energy names that have already been beaten up. Third point that has already been brought up is that we're not at a point where companies have gone bankrupt. Once the dominoes start falling then the real fear will hit the market. That's why your seeing many energy names near where they were back in late December. Now I'm not saying that oil can't bounce back from here (even though I personally think it unlikely) and everything will be all rosy I just want a little more clarity on the situation.

Also I am a trader and it's true that the average investor probably shouldn't follow a lot of what I have to say and I admit that. However the reason I tell people my opinions is so that they are aware of the risks they are taking when they blindly DCA and why sometimes waiting for the dust to settle a little can be better in the long run. This is why I point to companies such as Bear Stearns, Nortel, Blackberry, COS etc. These are all (or were) high quality names. Luckily I never invested in any of these companies and I'm not saying I could've predicted their failures but technical signals could've forced you to sell or prevent you from buying more rather than holding on till the bitter end.
Sr. Member
Jul 17, 2013
584 posts
94 upvotes
Greenwich, CT
TGokou wrote: Let me be clear here that I don't use vast majority of technical signals. One of the best ones that I rely on are trendlines. You can't tell me that trendlines are not incredibly powerful signals as almost 95% of the time a stock will usually bounce off an established trendline in a upwards market. When a stock breaks it's upward trendline it has a nasty habit of staying at much lower prices for an unforeseeable period of time. That would be a good moment to sell. As for the signals of timing a breakout or what not I try not to put too much emphasis on them as it's not important for when I decide to buy. I understand your points about algorithms and what not but trendlines do not rely on algorithms and so is a mute point.
Again, same conclusion. You should really read what I posted earlier instead of likely skimming or not reading it.

Let's say you pick stock X and it trends up over 10 years.

Over these 10 years, if you consistently follow trendlines and moving averages to buy or sell, you will lose to both the long-term investor and the algorithmic trader using basic trendlines.

The algorithmic trader wins because he's faster. The long-term investors win because on any stock that trends up over the long run, you are losing more gains than you are saving on losses. This is very simple logic and math.

To beat, any time you sell, you have to use the down-time in stock X to pick up stock Y which has to outperform X and experience positive stock price appreciation during this period. This means that you suddenly go from having to pick 1 winner to having to pick 2 winners. It's simply not a very good strategy.

Even something as simple as trendlines has to be ignored based on fundamental analysis at some point in time if you want to beat the curve. Once you start deviating from strict set of rules to follow established technical signals, you are no longer a technical trader and you could potentially hold on to huge losers. It's easy to say technical signals would've limited losses, but the fact is most people do not follow technical signals without fail. The ones who do usually never beat the market. Might as well just load up on an ETF if you're gonna do that.
Deal Addict
Sep 6, 2010
1935 posts
699 upvotes
Vancouver
TGokou wrote: Not sure what your trying to prove here. The fact that it's moved higher even though oil has gotten lower? First of all it's the only name of all the energy names that has moved higher although I suspect it won't be the only one. So thanks for cherry picking the best example. Second of all, people are believing the company that the dividend won't get cut which it very well may not. Depending on how long oil stays low I'm not sure that CPG can still maintain that dividend and when it is cut you can expect the stock to tank. If I were to buy an energy name at this point I'd probably want one that has a very low dividend because the market hasn't discounted CPG as much as the other energy names. If oil stays low (sub 50 range) for a year CPG will likely cut and the stock will likely fare worse than other energy names that have already been beaten up. Third point that has already been brought up is that we're not at a point where companies have gone bankrupt. Once the dominoes start falling then the real fear will hit the market. That's why your seeing many energy names near where they were back in late December. Now I'm not saying that oil can't bounce back from here (even though I personally think it unlikely) and everything will be all rosy I just want a little more clarity on the situation.

Also I am a trader and it's true that the average investor probably shouldn't follow a lot of what I have to say and I admit that. However the reason I tell people my opinions is so that they are aware of the risks they are taking when they blindly DCA and why sometimes waiting for the dust to settle a little can be better in the long run. This is why I point to companies such as Bear Stearns, Nortel, Blackberry, COS etc. These are all (or were) high quality names. Luckily I never invested in any of these companies and I'm not saying I could've predicted their failures but technical signals could've forced you to sell or prevent you from buying more rather than holding on till the bitter end.
Grrrrrrr what you continue not to understand by my hidden short message is you seem to base so much of your opinions based on TA and market timing. If you were indeed good at that sort of thing you would recognize that my example, a company I have owned for years, is that CPG has had a short term break out after 2 attempts it broke through the $28.50 to $29 range, with a retest on Thursday and then a break out confirmation on Friday.....happy now???? Again grrrrrr I am not going to get that 2 mins of my life back ever now!! Thanks for that and good luck on your investing thesis and time on the sidelines rather than time in the market. Good day.
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Aug 31, 2014
1484 posts
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YVR, BC
how can I buy oil at today's low prices and sell when it goes highers? is there a fund or way I can do this?
Member
Mar 28, 2013
208 posts
19 upvotes
SCARBOROUGH
BYD trades under byddf byddy is a Chinese company that is in the electric car space. Buffett owns 10 percent and should rally when oil goes up again.
Deal Fanatic
Jun 3, 2009
5007 posts
993 upvotes
Montreal
604nation wrote: how can I buy oil at today's low prices and sell when it goes highers? is there a fund or way I can do this?
Then look into USO and if you understand futures and leverage then UWTI is the bomb.
Gnucky wrote: BYD trades under byddf byddy is a Chinese company that is in the electric car space. Buffett owns 10 percent and should rally when oil goes up again.
Only if you like rolling a dice...
Member
Nov 8, 2009
455 posts
157 upvotes
gwplant wrote: Grrrrrrr what you continue not to understand by my hidden short message is you seem to base so much of your opinions based on TA and market timing. If you were indeed good at that sort of thing you would recognize that my example, a company I have owned for years, is that CPG has had a short term break out after 2 attempts it broke through the $28.50 to $29 range, with a retest on Thursday and then a break out confirmation on Friday.....happy now???? Again grrrrrr I am not going to get that 2 mins of my life back ever now!! Thanks for that and good luck on your investing thesis and time on the sidelines rather than time in the market. Good day.
LOL I'm not doing technical analysis on the stock, I'm doing a breakout on the oil commodity itself. Sorry about wasting your 2 minutes..:p
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Jun 22, 2012
4737 posts
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Shhanada
Now we have Russia doing some sabre rattling about discontinuing direct NG supply to Europe. Should make for an interesting day on markets.
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Oct 19, 2014
792 posts
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Waterloo, ON
So i finally opened up a TD direct investing account, i'll be able to buy some stocks in 2 days or so. I came up with this portfolio, let me know what you guys think:
[IMG]http://i.imgur.com/GaxkQlB.jpg[/IMG]

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