Last week this column allowed that if oil held the $78 level, the original idea of a price rally could still happen. That now appears to be the case. June crude oil futures, WTIC, apparently bottomed May 8 around $78.60. Friday, June crude is trading at $79.59, Importantly, price did not take out $75. The price low may be in place. If so, oil prices will rise into the election. Again as previously said this will make it more difficult for Biden to retain his office.
This idea is supported by energy and service share prices. Apache (APA) bottomed at $29 and is $30.69 Friday. DIG, a leveraged energy ETF, bottomed at $43 and is $45.07. Chevron Texaco (CVX) and ExxonMobil (XOM) both have strong charts exhibiting a healthy uptrend.
Halliburton (HAL) displays the same pattern. It bottomed at $36.50 and has risen to $37.30. The greatest potential may be in Transocean (RIG). Its low was $5.20 and has already risen to $5.91. Appreciate that this largest of the offshore drillers is trading at 46% of book value. Warren Buffett likes companies ‘with a moat around them.’ This means their product or service is not easily duplicated. That is certainly the case with Transocean.
The nations of the world are awash in debt. The result is a strong rally in gold and silver, real money. Gold recently made a high at $2,450. It has pulled back to $2,340. Silver is finally playing catch up to gold. Thursday it rose 2.77% to $28.36. My pick here is the silver bullion ETF SLV. It is trading at an affordable $25.79.
I thought stocks topped at the end of March. The recent price action is challenging that assumption. The DJIA high was 39,750 and has risen again to 39,520. The NASD 100 NDX topped around 18,400. It is 18,147 today. Patterns argue for a high but that has yet to happen.
Bond prices are bottoming. TLT is an ETF of long dated bonds. Now trading at $90, it could regain its last high at $99.
