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Short and Long
DJIA for arguments sake I remain bullish and invested.
OPEC at 86% compliance to cuts
US Propylene breaks out once again
Did you know equities and commodities run in opposite directions?

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Chemical Update 2016
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Short and Long

Short and long. The market indexes are near their highs, and with that come the predictions for more of the same, along with other predictions of a big decline, and everything in between. We see the market as having long- and short-term trends and it is important to realize what the overall trend is and how the near-term possibilities fit into the big picture. The S&P has rallied to more than triple the value of the 2009 low, and we think that it is clear that the longer-term trend of the market is bullish.

DJIA for arguments sake I remain bullish and invested.

Each day we read a variety of predictions about the stock market, economy, and the world that are all over the place in terms of the opinions about the future. Lately, there seems to be more attempts to call a major market top by using an indicator that may have worked in the past, but this is no surety the same condition will produce the same result today. Each market cycle is different, and what affects the market today may not be the same as the facts that moved prices in the past. The market is much more complicated than any one indicator or even a set of conditions can accurately predict.

OPEC at 86% compliance to cuts

Parties to an agreement to limit crude oil production starting in January were 86 percent in line with commitments, a joint OPEC, non-OPEC group said.Members of the Organization of Petroleum Exporting Countries agreed in November to sideline about what was expected in global demand so that total member state production would be at 32.5 million barrels per day in January "in order to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward." Non-member states, led by Russia, agreed to limit their production in solidarity.OPEC said a joint committee monitoring the terms of the agreement held its inaugural meeting in Vienna to verify compliance."According to the joint technical committee report for January 2017, the OPEC and non-OPEC producers achieved a conformity level of 86 percent," OPEC said in a statement. "The [monitoring committee] noted that there is still room for improvement to reach 100 percent conformity, and, in this regard, urged all parties to press on towards full and timely conformity."Speaking at an energy summit in London earlier this week, OPEC Secretary-General Mohammad Barkindo said there was strong coordination around the agreement, comments that followed reports suggesting stronger action in the second half of the year.The agreement holds for six months and OPEC said it would consider an extension as appropriate.Libya and Nigeria are exempt from the agreement as they depend on revenue from their energy sectors to help ensure national stability. Iran, meanwhile, is the only member state allowed to increase its production as it looks to regain a market share lost to nuclear-related sanctions.Petromatrix, a sector consultant group based in Switzerland, reported the OPEC cuts are not enough to eat into the surplus of crude oil already on the market. Data this week from the United States, where shale oil is recovering along with crude oil prices, show total U.S. oil stockpiles rose last week for the seventh week in a row.The latest survey from S&P Global Platts found compliance from the 10 OPEC members obligated to cut production at 91 percent. Platts noted coordination from non-OPEC members, but did not include their contribution in its compliance figures.Crude oil prices were slightly lower in early Friday trading. Credit Dan Gruber UPI. 24th Feb 2017.

US Propylene breaks out once again

There are many indexes and securities that have been stuck in ranges for the past several weeks, in an unusually low volatility period during a time when worldly current events have been anything but stable. As far as the markets are concerned, we are waiting for some breakouts from those ranges to give us a better indication of which direction markets may take in the months ahead. The following are some of the more important items and levels we are monitoring: The Dow Industrials are trading in a 19,700–20,100 range for eight weeks, and a clear breakout could be good for another 1000points in the same direction as a breakout.

Did you know equities and commodities run in opposite directions?

Over 60 years, equities ( stocks ) and commodities have mostly ran in the opposite direction. Meaning, with high commodity pricing, we see low stock pricing and vica versa. Right now with low commodity pricing, is augurs well for high equity pricing.

6 Year Oil Chart

6 Year Oil chart, break out from $55 could reach $80, however the trend is lower. Over the long term the commodity remains range bound for long periods of time.

DJIA Quiet consolidation

Quiet Consolidation. After the market makes a large move to the upside, it often becomes “overbought,” which mostly means some stocks have moved up too much and too fast, and now need to go through some kind of a consolidation period before the uptrend can resume. This appears to be where the market is positioned now after the 10% gain by the DJIA and S&P over the past six weeks. We believe the market can relieve this condition by moving sideways for a few weeks, or by pulling back and correcting a portion of the previous advance, or something in between, where some stocks pull back, but others do not.

New highs, for Christmas, DJIA approaches 20K

To Be Continued. The stock market has been hitting new highs recently, but the number of stocks supporting the move has been decreasing over the past few weeks, which is an indication a pullback could be coming. We think the long-term trend continues to be positive, but the market is extended for the near term, and a dip of about 5% on the indexes would not be unusual to see over the next few weeks. The short-term sentiment has also become a bit high on the bullish side as the Dow approaches 20,000, which also suggests to us a correction is due.

Oil peak again

Oil Peak Again. The rally on oil appears to have stalled again, despite the world developments that would indicate a strong likelihood of higher prices. The price has peaked in line with previous tops of the past year, and even though the recent peak was a slight new high, it has so far not carried through with an extended gain. This makes it likely that the commodity could pull back to the low end of the recent range of around $45 again. The recent weakening trends of a number of the energy-related stocks adds to the likelihood of a pullback in the price of oil as well, in our view, and suggests that investors should hold off for now on increasing exposure to the group.

For Oil and Oil Field Service 2016 is tough RYSTAD

2016 has been a tougher year for most service companies than 2015, and revenues have continued to fall as much as 27% when compared to 2015 on average.Companies exposed to onshore North American activity have seen their revenues diminish even more. While 2015 was the year that service companies built alliances, 2016 was the year that saw service companies starting to consolidate fully.We have seen many mergers and acquisitions happening, with TechnipFMC and GE-BHI as the frontrunners.Other service companies have started to unlock their own potential by completing the organizational and operational changes that were initiated last year.
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