Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Roebear who wrote (19762)	10/3/2002 12:21:02 PM
From: isopatch	Respond to of 36161

Roebear. Thanks for the forecast update. Yes, do remember your mention of the forecast confirming catalyst of getting some significant major moisture from Hurricane remnants moving into the eastern US to moderate drought conditions. Bingo. Looking good, bud. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ NG markets are fascinating here. Really have a lot of the less experienced players - on certain other energy threads - chasing their hairless little tails. Well.......... Whodathunkit?!<lol> The decoupling of the bullish commodity from the comparatively weak action of the equities isn't really that difficult to understand. In fact, there's some parallel to this in physical gold prices vs gold stocks, in recent months. (Strong hunch this would happen prompted heavily overweight in physical vs gold stocks some months ago - Per PMs awa perhaps a post or two here, at the time). Basically, it comes down to this. A commodity based stock sector can't fully express a bullish trend in it's underlying commodity during the severe declines of the broad market indices in a mega Bear Market like this one. Over the longer term, better quality commodity based equities will significantly outperform their underlying physical commodities. However, I've seen periods - similar recent months - where commodity/equity divergences exhibited a relatively more weakness in the equities than its corresponding commodity. Just one of the key mechanical processes at work which prompts such decoupling is the still wide spread use of leverage even during a major equity Bear Market. As margin players & long call traders - attempting to play counter-trend rallies - are whip sawed and stopped out of losing tech, biotech, telecom, drug, transport positions, etc., etc. sharp short rallies that quickly reverse to the downside? They're forced to sell some of their healthy performing stocks (like the golds) to cover margin calls OR maintain minimum cash reserves. Hope you're enjoying your vacation. Mine probably won't be till Spring Break. But we know where that will be. He he he.<g> Best, Isopatch