Markets & Crude Oil Overbought

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Markets look toppy here and continues to rise as most call for a pullback. ITZ continues to remain short WTI Crude Oil via Proshares Ultra Short Crude Oil ETF (SCO) average cost $36.50. Use the 50 moving average as a trailing stop.

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Chart Update: Gold GLD- Silver SLV & Silver Wheaton SLW

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Unlike the metal, Silver Wheaton (SLW) has earnings, currently trading @ 15 times '13 earnings. It's low in 2012 was also @ 15 xs '12 eps.

ITZ Weekend Update: Gold, Silver, & More...

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Short-term the metals are taking a hit - but the long-term investor is getting some excellent buying opportunities as prices of gold, silver and the miners (ITZ pick Silver Wheaton SLW) selloff . The near term action has been driven primarily by old news from major hedge funds- George Soros and Pimco and then some technical selling.

Charts indicate we could continue on the technical side, but could be reversed depending on what Asian traders do this week, the comments out of the G-20 meeting, the information in the Federal Reserve minutes and any news from congress on the pending March sequester.

ITZ takes a look at several charts this weekend:

For more charts & past posts Click Here

Market Sentiment Over-Bullish; Due For Correction

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Several sentiment indicators are signaling that the markets are overbought. ITZ takes a look at the $SPXA50R, $SPXA150R & $SPXA200R stocks trading over their respective 50, 150 & 200 day moving averages.

The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. Only one vote per member is accepted in each weekly voting period.

 

The Bullish Reading peaked a few weeks ago over 50%, although not a perfect timing indicator...it raises a caution flag that a reversal lower is over due.

 

NAAIM member firms who are active money managers are asked each week to provide a number which represents their overall equity exposure at the market close on a specific day of the week, currently Wednesdays. Responses can vary widely as indicated below. Responses are tallied and averaged to provide the average long (or short) position or all NAAIM managers, as a group.
Range of Responses:
200% Leveraged Short
100% Fully Short
0% (100% Cash or Hedged to Market Neutral)
100% Fully Invested
200% Leveraged Long

 

The green line shows the close of the S&P 500 Total Return Index on the survey date. The purple line depicts a two-week moving average of the NAAIM managers’ responses.

 

 

National Oilwell Varco (NOV) Update

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ITZ posted a comparison chart today on Twitter of Halliburton (HAL) & National Oilwell Varco (NOV)

 

ITZ has been suggesting NOV for a few weeks, taking 1/4 positions @ $70.50 on 2/1/13 & $66 on 2/5/13. Goldman Sachs put out a research report Thursday discussing their take on oil services in North America. link

 

Warren Buffett's Berkshire Hikes Stake in National Oilwell Varco by 26% to 5,294,800 shares, worth $372 million. LINK

 

Crude Oil; COT

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Crude Oil Commitment of Traders  CFTC LIGHT SWEET -NYMEX

As US Gasoline Prices Soar, Hedge Fund Oil Bets Near Record link , commercial traders understand their market the best and taking their position has a better chance of profit.

The IEA reduced its 2013 world demand estimate by 90,000 barrels a day following a weaker growth outlook from the International Monetary Fund. Read

*see more on crude oil link

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Short Crude Oil: Adding To Position

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ITZ is adding to the Proshares Ultra Short Crude ETF (SCO) @ $36.60 (1/4 position- that places the position @ 3/4 - having entered 1/4 positions @ $37 on Jan 23rd & $36 on Jan 29th.

National Oilwell Varco (NOV) :Update

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National Oilwell Varco NOV reported earnings February 1st of $5.83 a share for the 2012 FY,an increase of 24% from FY '11.

 Current estimates for 2013 and 2014 are $6.40 and $7.38, a growth rate of 9.77% and 15.3%, respectively. Currently- annual growth for the next 5 years is estimated at 16.7%.

The stock is trading $67.25 with a PEG of .67 giving you based on growth of about $100.00 fair market value. Based on the earnings report and NOV call for lower earnings for the first half of '13 Link Earnings Call Transcript

ITZ has lowered '13 & '14 estimated earnings... see chart below. Lowering 12 month PT from $105 chart to $96, based on a 15 times PE.
ITZ has a 1/4 position currently @ $70.50 entered 2/1/13. It had a 1/2 position prior $73.50 stopped out @ $72.50 see comments @ link  ITZ believes that NOV presents a long term value and will add to position soon (watching $66 level). Follow ITZ on Twitter for up to date posts.

ITZ Weekend Update: Crude Oil

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Crude oil (WTI) has been on a nice run the last several weeks, now nearing $100 a barrel. ITZ had suggested Proshares Ultra Crude Oil ETF (UCO) with a PT of $33 & $35 [those that use suggested stop exited @ $30.50]. ITZ portfolio has taken 1/4 positions via Proshares Ultra Short Crude Oil ETF (SCO) entering at $37 & $36.

This weekend we take a look at the Russell 1000 Energy Index ($RIENG) and a few of the stocks in that index. Below is a weekly chart, showing a breakout from an Ascending Triangle formation, PT $90 and then $100. A closer look into the index shows the move has been fueled by several refiners such as HES, HFC, PSX, TSO & VLO. Shares of oil refiners rose as key companies reported rising earnings on cheaper U.S. crude oil. Now that oil is approaching $100 bbl, look for some profit taking on those stocks.

Even though ITZ view currently is to be short WTI crude oil, it continues to like a few energy companies, like National Oilwell Varco (NOV) although it reported great earnings Friday, beating estimates and revenue...it raised a yellow flag for the coming quarter. There was some selling on the news, ITZ was stopped out but re-entered the position on the decline. Another driller that is favored, is Halliburton (HAL).

ITZ list of faves also includes Cameron Int'l (CAM), the second-largest oilfield-equipment maker in the U.S., rallying after orders for new gear almost doubled. Denbury Resources (DNR) billionaire George Soros initiated a position in Denbury during the third quarter of 2012.

Beneficiaries of the shale gas boom like Dresser-Rand (DRC) a player in the LNG compressor industry. Other oil companies on the list CVX, OII & SLB.

Russell 1000 Energy List LINK

 

 

DeMark On Apple: Update

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Thomas DeMark, founder & CEO of Market Studies, weighs in on Apple

 

 

ITZ mentioned a possible Island Reversal on Twitter back on January 30th LINK