Saturday, July 20, 2013

Houston-Energy Giving Ben a Problem

I took last week off as I went camping, and enjoyed it until a forest fire shortened our trip.  So now back in the world, I see my blog post from two weeks ago proved correct.  energy is breaking out.  Oil, gasoline, Servicers, and Natural Gas are rocking.  Personally, I think the smartest people in the room have lost control.

There is simply no way prices should be anywhere near the levels there are at, yet here they are.  People are scrambling into something they perceive as tangible, and that others do, as well.  I know that I am right when on a Friday night Ben Bernanke released a statement saying they are reviewing whether the "banks"  should be holding these commodities as assets, or even trading them.  They are worried, and do not want to be blamed.

One of two things are happening, there is tremendous political pressure being placed on the bankers to get these prices down, before the people  and the economy break, or, and maybe a little and, there is some significant new liquidity coming and like gold and silver before them, they need to use the paper markets or other scare tactics to tampen the speculative players.

I think it will ultimately succeed, but not before we see some prices blowing higher.  Unlike gold, there are entities today that are quite determined to keep prices elevated, powerful, and at odds with the western banking interests.  At some point though, there is no more blood in the rock, and demand will collapse.

So enjoy it while you can.  The two best for next week look like TAN, and OIH.  I played two small solar players, and closed them for nice profit, and am watching HAL again.

Otherwise, I completed my purchases of SH, and NUGT, and have one more purchase of SAND to make.  These are my 90 day holds, as I expect a market reversal and some reversion to the mean.  I am also long Natural Gas futures and looking for $4 plus.  $3.60 is my stop for now.

Here are some charts.

1 comment: