With crude oil sinking again today on economic slowdown worries, energy stocks have tumbled and even Exxon Mobil, fresh off its humongous earnings report last week, has broken support. I wrote this up in this morning's newsletter and while there was no trade trigger on it, I hope astute readers saw the technical breakdown when it happened. At that point is was worth a short!
Last week, I wrote in Barron's Online that energy stocks were attractive again. It was simply based on the risk/reward ratio they presented after falling hard and landing on support. But over the course of the week they failed to rally and as I always say, strong markets do not hang around support for long. With today's oil plunge, it looks as if the trade failed.
However, since we had good money management controls in place - in other words, a stop - we took only a few lumps. It could have been a home run but we ended up grounding out to the pitcher. Better than a double play, though.
But nothing ventured nothing gained. We have to take prudent risks in the markets or we'll never earn anything, The secret is to live to trade another day.
We'll revel in the success of our trade in T-3 Energy, which was stopped out at a nice profit this morning.
So, oil drops on a weak economy. But inflation is at a 27-year high. But gold is falling, too.
Something is very weird here and whatever it is, it cannot be good for the stock market.