Jon Najarian, from OptionMonster with a good read found on Twitter, on crude oil volatility or the OVX. With crude trading right through $60 on Friday, many pundits think $50 is the next stop. What intrigues me is that names like Schlumberger (SLB) and Exxon-Mobil (XOM) are not as technically broken as you might think. Now to be clear, my forte is fundamental analysis, so technical analysis isn’t a big strength, but XOM’s 50-month moving average is $87.27, while the stock closed Friday at $86.60. Schlumberger has still not broken the uptrend line off the March ’09 lows, AND is nowhere close to the 2012 summer lows near $60, when crude oil was priced much higher than it is today. The uptrend line for SLB is right in here at $80 or so, and with oil services leveraged to crude prices you would think the drillers, with the drop in rig count and presumably day rates, would just be getting slaughtered (more so than they are). Is that telling us something ? I have to say it for readers, I haven’t owned Energy in any material size for 3 – 4 years, so it has hurt clients in terms of performance at times, but I am now doing a LOT of company-specific research on the sector. I did own Halliburton (HAL) for a few years, but sold it this summer near $69 – $70 when it looked to be ready to roll over.
Jeff Miller with his weekly missive that is always a good read. Jeff’s weekly blog takes a while to get through and completely digest, but it is worth the time. Jeff’s conclusion seems pretty solid, but I wonder of the drop in crude triggers a global growth spurt that is basically what we’ve been looking for since the 2008 Great Global Recession ended.
My friend, Gary Morrow’s West Coast homie blog, This Week on Wall Street, which is a 2-for-1 special today, given that you can see Josh Brown’s link to the Barron’s Poll AND you can see Gary Morrow’s technical analysis of AT&T, of which we went long this week in client’s bond accounts, given T’s 5.50% investment-grade dividend yield. Here was our blog post on the T rationale, from this week. What wasn’t on the blog was T’s current “fixed-charge coverage” always found at the back of the 10-Q, which is 4.99(x) as of 9/30/14. There is a price war right amongst the cell phone carriers, started by T-Mobile and Sprint, but T has some room. We would buy VZ for clients, but lower, since VZ’s debt load after the Vodafone buyout is substantial.
Here is the Amazon link (www.amazon.com) to Alts Democratized, a book by Rob Martorama, CFA, and my former editor at the Street.com. Rob is a member of an advisor group in which I participate. Although I haven’t read it yet, I feel like the book will be instrumental in helping me better figure out where I want to put clients in the LiquidAlts universe. This is an emerging asset class, and Rob’s book is out front of the educational and understanding of the asset class.
Good piece from Bob Brinker’s blog. picking up a Stratfor link on the social and political fallout of lower oil prices.
Soberlook post caught my eye this week, particularly the T-Bill chart. A monetary experiment ?
Along with Jon Najarian, Norm Conley thinks crude oil might be due for a bounce. On Jim Cramer’s Mad Money Friday night, Jim was discussing Fibonacci Queen’s Carolyn Barodyn’s key level of $55 – $56 ?
Bob Lang of Explosive Options and the Street.com weighs in on the 30 day vol / divided by 90 day vol, if I have it right. Getting close to a market turn
Another great chart from @ukarlewitz Urban Carmel on the 10-year Treasury yield extremes.
One final shameless plug for Trinity clients: I was long the YCS (ultrashort yen ETF) for some clients who could handle the risk, but sold around $86 – $87 after the snap election was announced. Yen trading near 117 tonight, down from 120. Like the YCS again near $80, even better at $77. Reversion trade. Being patient. Yen 120 – 125 is significant support.
FedEx earnings report this week is huge – listen for global economic update: Europe, Japan and China, Southeast Asia.
Looks like a lot of smart money is playing for an equity and Treasury yield reversal this week.
Be careful out there.
Trinity Asset Management, Inc. by:
Brian Gilmartin, CFA
Portfolio manager