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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (19918)	10/13/2004 7:20:07 PM
From: gregor_us	Read Replies (1) \| Respond to of 110194

The XOI vs. The Price of Crude Chart. This has been a profitable chart for me since the Spring. The Amex Index of the Oil Majors, the XOI (a price wieghted index currently favoring TOT, COP, BP, and XOM) has fallen notably several times against the rising price of Oil. When I used to post more often on this board, I explained what I thought then was the relationship--the dynamics of the relationship--between the two. I've not seen anything yet to suggest my understandning of the relationship is broken: namely, the Oil Stocks begin to underperform against Oil as they work through the question of how much damage Oil is going to do, to the economy, and the stock market. Sharp traders meanwhile correctly assess that lemming retail investors will buy Oil Stocks as crude rises, so they play--but--they hold off as the stocks rise too high, correctly noting the lemmings will panic out, if crude cracks. And overall, Wall Street--much of Wall Street--actually and truly believes the thesis that "oil is too high" and "will be coming down soon." This is for many reasons but ultimately it's because very few people on Wall Street are capable of a macro view. As a sidebar, I note Wall Street's attempt today to shift the focus to technology, in what was a pent-up and building internal panic that Energy has been threatening to suck up investment dollars, leaving technology behind. The playbook sort of worked. But crude's rally and the XOI rally in late afternoon spelled out the stronger trend. The XOI vs WTIC Chart is pretty. Once again, it suggests crude must fall, or the Oil stocks must rise--in what has been a cyclical resolution played out several times already this year. stockcharts.com[h,a]daclyiay[dc][pb50!b200!f][vc60][iut!Ub14!La12,26,9]&pref=G I read this latest Commodity Smackdown, which has its roots beginning last week, as a short and spectacular event whose convulsive strength portends a ferocious resumption of the trend. Regards, LP PS: There were some momentary gifts today in the Coal Patch. BTU fell to the bottom of its BB, before recovering. Arch Coal and Consol were also down huge, before recovering. The gifts did not last long. Humoroulsy, the very same "story" behind the supposed come off in Crude--that China would curtail demand--was paired with the item that China would have to move more of its energy infrastructure to--you guessed it--Coal.