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2006-05-30 :: Goldman Sachs Calls $100 Oil

Goldman Sachs calls for oil to top $100 per barrel and what happens?  Oil stocks sell off.  Today was one of those days that nothing worked.  My entire screen was red today showing falling prices in everything.  Energy stocks started off strong in the face of all other sectors falling, but turned down when the rest of the market cascaded down.   The chart above shows you the Oil Service Index activity today.  The day began well with the index up 1.5% but fell and ended down 2%.  It simply makes no sense.

The fundamentals in the energy sector are as strong as ever.  Thursday, you have the OPEC meeting in Caracas.  Venezuela has been calling for production cuts from the organizaiton, and may hold some sway over the other members.   This helps establish a floor under oil prices and furthers momentum in energy company earnings.  This weakness is a real buying opportunity for anyone that has an underweight or even market-weight position in energy stocks.

This current selloff is a temporary event.  The fundamentals of the stocks we own will prevail, but in the interim, it is a rocky time.

I have been working on my next Investment Strategies newsletter.  In it, I will address what caused the current selloff and why the major trends we’ve been investing with are still in place.  I hope to have it out in the next week or so, but until then, keep checking here for my current thoughts and actions.

Mark