More on the XOI news:
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XOI OIL INDEX 466.86 -6.83: After a surge yesterday, this index of 16 oil stocks (see list below) is tanking today. The problem reportedly is that there is a lack of storage for futures contracts that are to be delivered tomorrow, so traders are selling the futures. This could be considered a temporary problem, but is instead causing widespread declines in stock prices as oil prices are off about $0.50 a barrel. Our view is that the big gain in the index yesterday of 13.46 was overdone and that some investors are taking the opportunity to unload positions. The entire stock market rallied yesterday when the yen rallied, on hopes that the Asia economic situation might be improving. Upon reflection, however, it is clear that a one day pop in the yen doesn't do much to resolve Japan's recession. Asia still has deep rooted problems, and oil prices will be affected for awhile by soft Asian demand. Whatever the reason, the XOI has quickly reversed itself and although it remains above the lows of a few days ago, it isn't showing any followthrough buying. Stocks in the index : Amerada Hess (AHC), Amoco (AN), Altlantic Richfield (ARC), British Petroleum (BP), Chevron (CHV), DuPont (DD), Exxon (XON), Kerr-McGee (KMG), Mobil (MOB), Occidental Petroleum (ORX), Phillips (P), Royal Dutch (RD), Sun (SUN), Texaco (TX), and Unocal (UCL). |
