Tuesday, December 29, 2009

Will Energy Stocks Repeat 2004?

For those that follow my blog, know I've been touting crude oil and energy for several weeks now. On a technical basis, oil tends to lag or echo gold's movements by roughly 3 to 4 months. Just watch one of the financial shows and how their reporting on oil possibly making a technical breakout over $80.
Another view I've held to is that the market is replicating the 2002/2003 market and we may see the S&P500 consolidate as we enter 2010, similar to 2004. Several sectors have lagged in 2009 as did in 2003, one being the energy sector. For sake of comparison, I've used the S&P Energy Index ($SPEN) in the annotated charts below.

2003 the S&P500 ($SPX) outperformed $SPEN:

While in 2004 $SPEN played catchup as the $SPX consolidated:

For 2009 again $SPEN lagged $SPX...will 2010 be bullish for energy stocks?

These 2 charts I've set up a gold/crude oil ratio, will the ratio decline in 2010? My view is that gold will continue to rise, but that crude oil will rise~ by a greater percentage. I see gold hitting $1300, and crude oil around $95 to $100.

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