Energy stocks power summer rebound
After months in the doldrums, equities are perking up for the first time since May.
We're off to the races again. Yes, there are still risks on the horizon. The upcoming second quarter earnings seasons could be a dud. Egypt could blow up. The Federal Reserve could keep talking up the dreaded "taper" of rolling back its cheap money stimulus. Meanwhile, the economic data remain relatively weak, with manufacturing activity slowing and job gains concentrated on low-wage, no-benefit part-time positions.
But for the first time in months, investors are looking past all this and are buying stocks hand over fist, particularly energy stocks. As a result, the Dow Jones Industrial Average ($INDU) is breaking out of a multi-month downtrend pattern, while small cap stocks are already pushing to new record highs. Signs abound that the strength will continue. Here are the highlights.
The chart above shows how the Morgan Stanley Cyclical Index (CYC), which is tied to the performance of economically-sensitive stocks like Ford (F) and Caterpillar (CAT), is rounding into an uptrend pattern for the first time since early May. Where cyclicals go, the rest of the market tends to follow.
There's more. Investor sentiment is recovering from a bout of pessimism. Market breadth is recovering from lows not seen since November. And buying pressure from the late June market bottom has been steady and broad: Since June 24, we haven't seen a down day with more than 700 net declining issues on the NYSE.
Currently, after the recent surge in crude oil towards $104 a barrel, energy stocks are leading the way higher. You can see this in the breakout underway in the Energy Sector SPDR (XLE), shown above. My favorites in the space are National Oilwell Varco (NOV) and Schlumberger (SLB). I'm adding both to my Edge Letter Sample Portfolio.
Disclosure: Anthony has recommended NOV to his clients.
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Market (DOW) up about 90...
Most of our Energy stocks were up about 1.5-2.0%..
Yeah, we likey very much.
Ahhh, the Sweet smell of recovery....Why not jack the shidt out of energy costs..??
Yeah, why not..
It`s all about earnings.That`s the real reason the market is up 90% with Obama.The
Obama haters love to dream up other reasons.
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The offering could become the second-biggest this year if underwriters exercise an option to buy more shares.
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