Thank you for sharing another excellent report, Eric. The divergence in performance between precious metals and their stocks has been intriguing to watch, especially with oil prices having come down in recent months. It will be interesting to see if PM stocks can emerge as a leading sector should we continue to see a weak stock market in the months ahead, or if the baby will once again be thrown out with the bath water.
May I ask how you decide on which sectors to focus on each week? Are they simply the sectors that may soon generate buy signals or that are showing the most leadership / relative strength? And, does your long-term macro outlook favor certain sectors over others?
Since I learn best visually, I attempt to review most sectors at least once a week by just scrolling through each sector and sub-group on the EV site. It takes about an hour. Otherwise, I look at what I consider "important" sectors - precious metals, energy, technology, and retail on a daily basis - sometimes checking the stocks in each sector that are included in the database. The 20 day MF reveals when to be on heightened alert.
That said, I gather input from other sources, such as daily reading Billy and Pascal's commentary and robot signals, important research and writing shared by members such as yourself and Mike Scott, The Kirk Report and especially his Weekend Chart Show and after-hours reports, and analysis from those who I consider top-notch like Kevin Marder amongst others. These are useful sources for gathering information then drilling down areas of focus. I also watch Brian Shannon's free weekly videos and use the alphascanner trade planner to visualize the stages.
Finally, there are stocks that I have now been following long enough that I simply check them with great regularity. For example, I traded DNR and POT last week because I know a good deal about them and feel familiar with their trading patterns and price/volume history.
Thank you Eric. This is up to the point.
I'd like to expand on your point regarding the energy companies attracting money.
As far as oil prices decrease (and the situation in Libya still points into that direction,) it is difficult to aggressively step in to buy oil related equities.
One method that I find rather useful in trying to value the different producers is to see how their equities have been performing in the past compared to oil prices (I divide the equity by the oil price).
Below are a set of such files.
Those that have a flat 200DMA (50MA Weekly) are viewed as producers "in line". These are usually large producers with reserve, whose price will depends more on the price of oil than on their outstanding execution. Most oil sands belong to that category: they do not have to dig new holes to explore for new reserves. They need to invest capital, reduce their production costs and try to sell their production as high as possible. You will note that the slope is slightly different whether you use US$ or Canadian$.
Out of these figures, the best performing stocks are easy to point. These are the stocks I am looking at. Of course, value and timing are two different things. You still need to buy at the right timing, but if you are wrong on the timing, you might still do OK with the leaders.
Thanks Pascal. I had not considered that before and will keep that in mind when looking at the energy sector.
I did see that the shale oil sector and oil sands sectors issued buy signals last week - in conjunction with the whole energy sector. This leads me to believe that a short-term bottom for oil prices may be at hand since their unconventional methods require higher prices to breakeven. If I am not mistaken, that price is somewhere in the 70's or low 80's, depending on each producer.
I have not had enough time to put together a meaningful review for the weekend. I hope to gather my thoughts on my days off this week.
I will be traveling this week and part of next week, so I have prepared some observations that I will share now.
The main gist is that there are going to be select opportunities on the long and short side, but some patience will probably be needed and rewarded while price action evolves.
I really hope everyone has had the chance to read Mike's CANSLIM commentary and Aly's CSI, both of which are really helpful for me and thus very appreciated.
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