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I am talking about black gold and not ‘good oil’ in the sense of the ‘low down’ or ‘secret information’.
I promised no more controversy about short term equity markets for the moment so I thought the subject of oil may be safe ground.
I watch oil daily and have been watching with interest the lag between oil stocks and oil price. This is not surprising given that equity markets have been uncertain and there would be little point in piling onto oil stocks if the overall market was to fall.
So is it too late to buy oil? In the last 48 hours global oil stocks have surged, so many investors seem to think it is a good time to bail in.
But let’s look at the chart:
click chart for more detail
This current big run in oil is probably pretty much over. It is possible we could see a climb to the second Wave Five – to about US$85 – but it is not a high probability and I would not put money on it. I would be happy to be wrong.
If oil was to climb that high we could well see global equity markets get the jitters – again – and oil stocks could be dragged down with the overall markets.
For me, jumping into oil stocks is probably too much like hard work for maybe not a lot of return.
I will continue to swan along until I see the ‘easy money’ opportunity. I must confess I have become a tad lazy.
Enjoy the ride!
Tom Scollon
Chief Analyst
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