Friday, November 11, 2005

Tomi Kilgore's Market Map: Crude's bull market may have just ended - Oil and Gas - Energy - Opinion

Crude oil down 20%! Crude oil trading below the 200 day moving average!

For those who believe that the definition of a bear market is down 20% and for those who use the 200 day moving average as their stop gap sell out point, the pressure is building. My friends and family accounts hold little or no oil stocks. My natural inclination is to buy when reporters start talking about bear markets and drops below 200 day averages. I suspect there might be a bounce in crude coming and therefore a bounce in energy stocks.

However, I do not plan to buy energy stocks. I like to buy for the intermediate or long term and I am convinced that $40 oil is on the way. I can't specify the date $40 oil will arrive other than to say it will be within 3 years. I think it is a losers game to try to trade the dips in oil.

Several of my friends and family accounts purchased more CAL, AMR and or WMT this morning. These are projected as long term holdings. CAL and AMR have certainly been volatile the past three years. Riding these stocks has truely been a Ken Fisher "bucking bronco" ride. Enjoying a bucking bronco ride is an acquired taste and several of my friends and family are starting to enjoy the ride.

Investors should read the news. The tricky part is understanding to lean against the news. I guess a good analogy to making great returns in the stock market is the analogy of hiking through a wind storm. You have to know the direction you want to go and to perservere no matter how strong the wind. The really hard thing to learn is that you can tell you are going in the right direction if the media wind bags and investment bank analyst are blowing the other way.