Oil And Trump Both Need To Pause And Catch Their Breath

Adam Feik - INO.com Contributor - Energies

Oil has come a long ways, in really short order, rising from $26.21 on February 11 to over $38 as of March 31 (a 46% increase).

Hedge funds have become “as bullish on crude as they’ve ever been, according to the latest CFTC data,” said CNBC’s Melissa Lee on Wednesday.

Is the bullishness justified? Let’s try to sort all this out.

To start, here’s video of a Lee’s and Timothy Seymour’s CNBC interview of PR Advisors founder Robert Raymond. To me, Raymond’s analysis makes a lot of sense. See what you think. I’ve excerpted several statement from Mr. Raymond, followed by my comments (labeled Feik) to give you my view.

Raymond: “(The bullishness) is actually part of what has us concerned.”

Feik: I agree. John Templeton provided a favorite investing maxim of mine (and of many others) when he said, “Bull-markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” With so many people trying to bottom-fish in oil and energy right now, I don’t see the kind of pessimism or skepticism that sparks bull markets. So, like Mr. Raymond, that has me concerned. Continue reading "Oil And Trump Both Need To Pause And Catch Their Breath"

Opportunities In Pipelines

Adam Feik - INO.com Contributor - Energies

I wrote a few weeks ago about investing in Master Limited Partnerships (MLPs) and pipeline companies, and some of the nuances involved. Starting with the fact that there ARE some major differences between MLP funds and pipeline funds, so investors need to know what they're getting.

As I stated in that article, I believe the US oil & gas boom means pipelines and energy infrastructure are going to remain in high demand for the foreseeable future – despite Hillary Clinton's Tuesday announcement of her opposition to Keystone XL. Plus, I generally regard pipelines as being a historically defensive area of the stock market, comprised of relatively steady, fee-for-service businesses. Hence, today I present a continuing analysis of a couple ways to play the midstream energy industry – whose stocks may be receiving undue punishment in the midst of the oil crash of the past 15 months.

To be clear, the midstream industry's haircut to date, while noteworthy, has not nearly so bad as the carnage in oil or the rest of the energy sector. As the graph below shows, pipeline stock prices are down about 16% since June 20, 2014, compared to nearly a 38% decline for the overall energy sector, and a 63% crash in oil prices.

EMLP vs. XLE vs. DBO

Graph from Yahoo! Finance. EMLP is First Trust North American Energy Infrastructure Fund, shown here as a proxy for pipeline stocks. XLE is the Energy Select Sector SPDR, shown here as a proxy for energy sector stocks. DBO is the PowerShares DB Oil ETF, shown here as a proxy for oil prices.

Actually, ALL the of pipeline stocks' decline in the last 15 months has come since roughly May 5th this year (shown on the graph above with a dotted vertical line), which is the date oil prices bumped up against its most recent top and began melting down again. Pipeline stock prices had been flat throughout oil's collapse for the prior 10+ months; but since that May 5th peak, pipelines (as measured by EMLP) are down 18.75%, the broad energy sector (XLE) is down 23%, and oil is down 24%. See graph below. Continue reading "Opportunities In Pipelines"

Playing The Oil & Gas Pipeline Opportunity In America

Adam Feik - INO.com Contributor - Energies

One thing the energy production boom means – besides the wild, now-14-month-long crash in oil and gas prices – is that pipelines and energy infrastructure are going to remain in high demand. As American oil & gas companies continue producing – as they've shown they can & will do –, those producers will have to continue using the services of the pipeline, transportation, and storage facility owners.

The term "MLP" can mean many things

Many investors equate "pipelines" and "energy infrastructure" with Master Limited Partnerships (MLPs) like Enterprise Product Partners (EPD), Energy Transfer Partners (ETP), Williams Partners LP (WPZ), Enbridge Energy Partners (EEP), Magellan Midstream Partners LP (MMP), etc.

Yet not all MLPs are pure pipeline plays, nor are all pipeline companies are structured as MLPs!

First, many MLPs aren't "midstream" energy companies at all, but rather, are involved in "upstream" activities like exploration and production (e&p). As a result, these "upstream" MLPs' distributions depend on production – which, in turn, is highly affected by oil & gas prices. Continue reading "Playing The Oil & Gas Pipeline Opportunity In America"

The Top Stocks In Each Market Sector

Today I will be examining nine market sectors and looking at the top stocks in each of these sectors. I'll be looking at the consumer, healthcare, energy, financial, technology, industrial, materials and the utility sectors. Each of these sectors has a market leader that's in a strong trend and I'll share those top stocks with you in today's video.

One of the strongest market sectors in the past three months has been healthcare. This sector is up 11.6% and is the leading winner amongst all the sectors. I'll show you the strongest stock in this sector and how it could still go further on the upside. Continue reading "The Top Stocks In Each Market Sector"

How To Profit From The Polar Vortex

To profit from the short-term openings the market hands you, it takes the right strategy.

That's a lesson I had to learn after correctly predicting that the U.S. would be in for a remarkably cold winter. Though temperatures in much of the U.S. have fallen to the lowest levels in years, the stock picks I suggested simply didn't have enough leverage to weather as I anticipated. As I noted in late December, those picks rose only modestly as winter dug in, even as natural gas-focused exchange-traded funds (ETFs) fared a lot better.

The explanation is straightforward. As I noted last month, "Many energy traders don't trust quick moves in energy prices, and they assume that profit-taking will soon ensue. If gas prices move back below $4 per thousand cubic feet (Mcf), then these companies will generate a lesser benefit."

Since then, natural gas prices have kept surging, and these stocks still haven't budged much.

Yet a change in the weather provides a shot at redemption. Those rapidly surging ETFs appear set to reverse course, and you can even invest in this strategy without initiating a short sale. Continue reading "How To Profit From The Polar Vortex"