• August 23, 2019

Odessa American: Dennis Elam

Dennis Elam

ELAM: Deflation on hand

The yield on the 30-year Treasury bond fell below 2 percent yesterday. JC Penny is trading at 59 cents, may be de-listed from the New York Stock Exchange, and will begin selling second hand clothes with thredUp. Energy Service XES not only fell below $8 as predicted, it traded under $7 yesterday, a new low.

Sunday 08/11/2019
ELAM: Interpreting the News
Posted: August 11, 2019

Consider this ‘news’ all from the same article in today’s Wall Street Journal.

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Sunday 08/04/2019
ELAM: Oil and stocks tank, gold soars
Posted: August 04, 2019

Energy service companies continue to struggle. The XES ETF already trades beneath its 2009 panic low. Now trading  at a mere $8.79, it looks to re-test its May low of $8.50.

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Sunday 07/28/2019
ELAM: Refiners rolling over, metals chug upward
Posted: July 28, 2019

Valero reports a 27 percent drop in second quarter earnings. The refiner was forced to process more expensive crude, cutting into margins.

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Sunday 07/21/2019
ELAM: Stocks Flash Short Term Top, Oil Falters, Metals Break Out
Posted: July 21, 2019

Let’s start with the stock market. The Dow Transport Index and the FANG / NASD tech stocks are the leaders. We are now in earnings reporting season. On Wednesday CSX (railroad) reported per share earnings of $1.23. The analysts were expecting $1.35. CSX dropped 10% that day falling from $80 to $70. Other railroad stocks fell as well. And since CSX is included in the Transportation Index, TRAN fell as well.

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Sunday 07/14/2019
ELAM: Ross ‘n me, meandering down Wall Street
Posted: July 14, 2019

In October, 1974 I landed under the direction of Ross Perot who was tapped to head former F I DuPont, later DuPont Glore Forgan, and finally DuPont-Walston.

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Sunday 07/07/2019
ELAM: New S & P High, Happy Independence Day
Posted: July 07, 2019

The third year of a Presidential term is usually an up year. So far so good in 2019.

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Sunday 06/30/2019
ELAM: Summer Slumber Underway in Markets
Posted: June 30, 2019

After May, Go Away

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Sunday 06/23/2019
ELAM: Gold and oil advance
Posted: June 23, 2019

Gold futures rose 3.6% to $1,392.90 an ounce, the biggest one day advance since June 2016 and its highest settle since 2013. WSJ Today

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Sunday 06/16/2019
ELAM: Stocks Topping, crude at $52
Posted: June 16, 2019

A month ago crude oil (West Texas Intermediate WTIC) had just moved back above $62.  Suppose your omniscient columnist had whispered in your ear this guaranteed prediction.

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Sunday 06/09/2019
ELAM: Oil prices fall, stocks in counter trend rally
Posted: June 09, 2019

The U.S. remains on track to impose tariffs on Mexico next week.

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Sunday 05/26/2019
ELAM: WTIC cracks $60 to the downside
Posted: May 26, 2019

Thursday US oil futures tanked 5.7%, the biggest percentage loss of the year. The DJIA recouped some of its losses in the final hour after falling 451 points earlier. Chip-makers have been hard hit.

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Sunday 05/12/2019
ELAM: Have we seen the top?
Posted: May 12, 2019

China said on Friday that it would retaliate after the US moved to increase tariffs on hundreds of billions of dollars’ worth Chinese products on Friday, effectively breaking a months-long truce and seriously complicating ongoing talks..

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Sunday 05/05/2019
ELAM: Oil and stock prices likely topping
Posted: May 05, 2019

The Reuters/Jefferies Commodity Resource Bureau index peaked in 2008 around 460 after rising from 180 in year 2002.  By 2011 it had regained 370. The oil price collapse beginning in 2014 has now taken us back to CRB 180. The take-away here is that commodity prices have been falling for ten years.

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Sunday 04/28/2019
ELAM: GDP Rises 3.2%, Markets Still at Resistance
Posted: April 28, 2019

JOINT BASE ANDREWS, Md. (Reuters) - U.S. President Donald Trump said on Friday he called the Organization of the Petroleum Exporting Countries and told the cartel to lower oil prices.

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Sunday 04/14/2019
ELAM: Merger Fever Hits the Oil Patch
Posted: April 14, 2019

This is certainly the big story in the West Texas oil patch this week. Highlights include the following:

  • Apache has secured 307,000 contiguous net acres (352,000 gross acres) at an attractive average cost of approximately $1,300 per acre.

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Sunday 04/07/2019
ELAM :Oil and stock prices edge to new highs
Posted: April 07, 2019

West Texas Intermediate closed Tuesday at $62.58 above the 200-day moving average of $61.68. Prices are up 37% for the year. Signs Point to Durable Rally in Oil, WSJ, Today

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Sunday 03/31/2019
ELAM: Stocks and Oil at Resistance
Posted: March 31, 2019

There is not much new to report on oil and stock prices. Each has tracked the other. Oil has just poked over $60 as I write this morning. Stocks measured by the Dow Industrials are still fighting resistance at 26,000. The Transports and Russell 2000 are bouncing after sell-offs. That may be what is needed to fuel a rally higher.

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Sunday 03/24/2019
ELAM: Markets at resistance
Posted: March 24, 2019

The markets are closed for Good Friday and this is the end of the quarter. This is the first on quarter stocks have experienced a down turn in two years. Last Monday stocks advanced 669 points, the largest one-day gain since 2008. But plotted on the highly volatile charts since the all time high in late January, it does not look like a big deal.

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Tuesday 03/19/2019
ELAM:Stocks and Oil Still Facing Resistance
Posted: March 19, 2019

The United States is now a net energy exporter with production exceeding that of Russia or Saudi Arabia. If you are in the USA conducting the energy service business, what could go wrong?

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Sunday 03/17/2019
ELAM: Oil hits 2019 high. What could go wrong?
Posted: March 17, 2019

Oil prices were advancing to new highs. This supported new construction of some of the most elaborate and luxurious offices ever seen for Permian Basin Oil Workers. Residential housing was in short to no supply.

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Sunday 03/10/2019
ELAM: Stock markets roll over
Posted: March 10, 2019

The small cap Russell 200 is doing the same as the Transports. My conclusion is that we should expect some correction to the rapid stock price rise since late December. And given the high correlation between the two, expect the same for energy prices.

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Sunday 03/03/2019
ELAM: Stock and Oil Prices Continue Lockstep
Posted: March 03, 2019

I’m looking at a five minute chart here and oil and the S & P are virtually identical the oil trade was just mirroring stocks. 

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Sunday 02/24/2019
ELAM: Going for the gold
Posted: February 24, 2019

Gold focused exchange-traded funds notched nearly 72 tons of inflows last month, exceeding their total for all of 2018.

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Sunday 02/17/2019
ELAM:Stocks and Oil Breaking Out
Posted: February 17, 2019

Oil prices rose for a third straight session amid increasing evidence that Saudi Arabia and other major oil producers are making good on a pledge to reduce production. —Wall Street Journal, Friday

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Sunday 02/10/2019
ELAM: Earnings slump, markets retreat
Posted: February 10, 2019

Yes that is a lengthy quote but it is a fact, and frames the issue quite well facing the Permian Basin’s oil and gas industry this Tuesday. (Honestly, had you forgotten about this little peak behind the regulatory curtain?)

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Sunday 02/03/2019
ELAM: Crude and stock prices rally
Posted: February 03, 2019

This is certainly the big story in the West Texas oil patch this week. Highlights include the following:

  • Apache has secured 307,000 contiguous net acres (352,000 gross acres) at an attractive average cost of approximately $1,300 per acre.

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Sunday 01/27/2019
ELAM: Markets in the DMZ
Posted: January 27, 2019

The big picture is that the fall 4,000 point DJIA drop ended Dec. 24. Since then stocks and oil have rallied together as they fell together.

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Sunday 01/13/2019
ELAM: Decision Time for Markets
Posted: January 13, 2019

Yes, most stock market indexes have rallied about 10 percent of the December lows. That has emboldened the bulls who are calling for ‘all clear’ on the financial television shows and media. And crude oil has rallied ten dollars off its $42 low along with stocks. This column has warned that the DJIA 24,400 level is the half way point of the entire from (round numbers) 26,600 to 22,200 this past quarter. The question now is, will stocks continue their rise confirming the ‘correction’ has ended? Or was the 2,000 point rise just a relief rally in a new bear market?

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Sunday 12/30/2018
ELAM: Computer trading gone wild
Posted: December 30, 2018

The Dow Jones has rallied 1400 points off its Wednesday intraday low and the Volatility Index VIX is still at 30. That ought to tell us something about the market environment we’re in. One piece of bad news could easily send us back to the recent lows, so keep that in mind if you’re trading short-term. Crude oil ($WTIC) is higher by 1.50 percent this morning to $45.28 per barrel, also remaining rather close to its recent lows - not a great signal for global economic conditions. --Tom Bowley, Stockcharts.com

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Sunday 12/23/2018
ELAM: Meltdown
Posted: December 23, 2018

Stock prices fall seven times as fast as they rise.

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Sunday 12/16/2018
ELAM: Wall Street Has a Breadth Problem
Posted: December 16, 2018

There are a multitude of technical and fundamental indicators regarding the stock market.  Here are two which are easy to understand and cut through the clutter of the focus on FANG, Boeing, and Apple.

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Sunday 12/09/2018
ELAM: That was a better than average prediction. Now what?
Posted: December 09, 2018

The 617 point advance in the DJIA Wednesday generated a lot of positive buzz in the media. But there are reasons to remain cautious. 

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Wednesday 12/05/2018
ELAM: Evidence builds the bear has arrived
Posted: December 05, 2018

And that is precisely what happened Tuesday, Dec 4. The DJIA plunged 799 points to erase most of its 2018 gains. The economically sensitive Transports dropped 4.5 percent on Tuesday. Bank, energy, and energy service stocks were all hammered.

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Sunday 12/02/2018
ELAM: Beaten down markets take a breather
Posted: December 02, 2018

The world is awash is oil inventory. And many of the oil producing countries, like the African and Iran Exporters, have nothing else to sell. Which means there is nothing else to support their economies. While %50 WTIC and $60 Brent might allow some profit, it won’t support the entire economy.

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Sunday 11/25/2018
ELAM: Oversold markets due a bounce
Posted: November 25, 2018

It is said the world is in a state of bankruptcy, that the world owes the world more than the world can pay, and ought to go into chancery and be sold.

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Sunday 11/18/2018
ELAM: Oil below $60, bear market or a bottom?
Posted: November 18, 2018

Dear Professor, how is it that such dramatic reversals happen in the energy markets?

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Tuesday 11/13/2018
ELAM: A perfect storm might be brewing as oil prices drop
Posted: November 13, 2018

In our update last weekend, we mentioned several reasons for the drop from $76 to about $60 in one month. Those included a very crowded trade betting on $100 by Christmas 2019, $200 a night Super 8 motel rooms in the Permian Basin, a non-confirmation by XES for the move up in XLE, and no lack of supply of oil. And social mood was turning more negative in all respects. That is seen in lower oil and stock prices.

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Sunday 11/11/2018
ELAM: Oil prices decline tenth straight day
Posted: November 11, 2018

Oct. 3 marked the high in stock indexes and oil prices at $76.41. Since then both have fallen. Oil prices have fallen 20 percent, notching a lower low than last June at $64. As I write Friday morning, WTIC fell below $60 and has now recovered above that level to $60.42. There is no shortage of headlines proclaiming that this 20 percent price decline means oil has entered a bear market.

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Sunday 10/28/2018
ELAM: Stocks fall 7.5 percent
Posted: October 28, 2018

In fact the Dow Industrials declined 7.5 percent from the 26,600 high to 24,600 Friday. Personal computers have prompted the creation of many technical indicators. There is not space in this column to list all of them but many are now ‘oversold’ to the extent of making lower lows than last February. So is this any more significant than last February?

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Sunday 10/21/2018
ELAM: World Stock Exchanges Sag Along with Oil Price
Posted: October 21, 2018

On the close Thursday the New York Stock Exchange recorded nine times as many lows versus highs.

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Sunday 10/14/2018
ELAM: Social Mood Fractures
Posted: October 14, 2018

“You cannot be civil with a political party that wants to destroy what you stand for, what you care about.” — Hillary Clinton

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Sunday 10/07/2018
ELAM: Too good to be true
Posted: October 07, 2018

Which raises the question, why are Democrats so intent on impeaching Trump rather than trying to figure out how he does it?

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Thursday 10/04/2018
ELAM: October lives up to its reputation
Posted: October 04, 2018

Market reversals or significant lows have occurred during October in 1929, 1987, 2002, 2008 (highest number of new lows), 2012, 2014, 2016, and now 2018.

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Sunday 09/30/2018
ELAM: Wither OPEC?
Posted: September 30, 2018

Gee nothing has changed since Twain’s observation over 100 years ago. Now Congress, the US Chamber of Commerce and the American Petroleum Institute are sponsoring legislation to create NOPEC. That acronym stands for No Oil Producing and Exporting Cartel. The idea is that the US Attorney General would bring anti-trust charges against OPEC countries for seeking to manipulate the price of oil.

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Sunday 09/09/2018
ELAM: The Beto phenomenon
Posted: September 09, 2018

This is not an endorsement of either candidate. This is an explanation of how socionomics, the application social mood to social outcomes, easily explains the Beto/Cruz race.

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ELAM: Time to examine real money
Posted: September 09, 2018

Let’s start with a quick recap. Telsa bond fell to 84 cents on the dollar, Venezuela inflation is out of control, Argentina’s motto has become — we’re not Venezuela, yet. Apple jumped 2.4 percent Thursday, Kroger tanked 10 percent, Sears continues to swirl down the retail drain, and crude oil dropped 2.5 percent, supposedly on OPEC increased output. Overseas markets from China to Canada as well as emerging markets are in decline. What is an investor to do?

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Sunday 09/02/2018
ELAM: Time for a correction?
Posted: September 02, 2018

Tom McClellan at McClellan Financial has noticed an eery parallel to 1994. We had a new President in 1992 beset with scandals (Travelgate, Hillarycare) but a rising stock market. The same thing has occurred since 2016. Then as now the market peaked on Feb. 2 and then had a rapid sell-off into early April. The market then recovered into Aug. 30.

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Sunday 08/26/2018
ELAM: Texas is energized
Posted: August 26, 2018

Cheniere is now building its third LNG production terminal on the north east side of Corpus Christi Bay. There will eventually be five projects capable of producing an annual 22.5 million tons per year (mtpa). Projects are underway to deepen the Corpus Christi harbor so larger ships can take advantage of the widened Panama Canal. Even China has thus far not raised tariffs on LNG given their demand for energy.

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Sunday 08/19/2018
ELAM: Godzilla dollar tramples commodity and currency prices
Posted: August 19, 2018

Emerging markets stock are teetering on the edge of a bear market given the rising dollar and tariffs.

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Sunday 08/12/2018
ELAM: Cost effective, maybe, maybe not
Posted: August 12, 2018

Robotization is taking many forms. But I am not sure this is as cost effective as the firms who are adopting these methods believe. Surely the most aggravating is the robot voice adopted by, yes, AT&T. Attempt to call them and Mr. Robbie the Robot answers. Supposedly voice recognition kicks in and one gets a response.

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DAILY OIL PRICE: August 22

  • Crude Oil: 55.35 (-0.33).
  • Nymex MTD AVG:  54.8318.
  • Natural Gas: 2.159   (-0.011).
  • Gasoline: 1.6675   (-0.0263).
  • Spreads: October/November   (+.19)   November/December   (+.29).
  • Plains WTI Posting: 51.75   (-0.50)
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