Commodities Question
Do you think the oil stock correction is going to an end soon?
Many oil stocks have come down from their peak, do you think we will see oil sector reverse up soon?
Additional Information:
Many oil stocks have come down from their peak, do you think we will see oil sector reverse up soon?
Hi Ethan,
From the technical aspect, oil shares are reversing up. But my concern is that whether the current oil price is sustainable. We know that the high oil price maybe going to run for years, but during this period of time, oil price may pull back. Do you see any sign of the oil price correction ahead?
Best Answer
2024 points
MNSL answered 2 months ago …
Most analysts have been positive for oil and other commodities for the last seven years and this is the first time they think there could be really a dramatic secular reversal, that it's not just a pullback
I totally agree with them. In next 12 months anything can happen.
Some factors to watch:
Second-quarter net inflows into European exchange-traded instruments linked to commodities fell about 58 percent to $800 million from the previous quarter.
The expansion is now slowing
Growth in USA, UK and China slowing. As a result of this demand for commodities will come down
Some industries are unwilling to pay for current higher prices
Some countries will become self sufficient in grains, such as Maize (corn), wheat and rice
Any bull market will have correction, crash and pull back time to time. We had 7 years of bull market for commodity market.
Even Soros, Top investment Bank analyst and industrial experts expect Oil to come down $70/Barell.
Answers
2646 points
EthanR answered 2 months ago …
I was looking at XOM and CVX charts and on both the MACD is looking more positive, so yes, I do believe these stocks will soon come back. CVX ran up from 80 to 102 in six weeks, so there was quite a lot of froth in those shares. The stock is right now sitting on its 50 week moving average, and I think you can buy here, but set your stop loss around 95. That is just below the recent lows.
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EthanR answered 2 months ago …
The best suggestion I can make to you is to watch the charts of both OIH and DIG. OIH is right up against highs now, if it continues going up, that would be very bullish. DIG, on the other hand, has pulled back to the 50 day M.A. if it holds and goes higher, again that is bullish. If it doesn't hold and if OIH can't break through it's previous highs, then your answer is that oil is going to come down. I am not sure that the price alone will determine what happens. Also watch gold. Gold trades inversely to the dollar. If gold continues going up, then oil will probably as well.
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