With such negativity in the market, I decided that I would search for any glimmer of hope, a small nugget of positivity. Well, it leads us to the US Dollar, Treasury Bond Funds and the Dow Jones US Water Index. Other than that, most, if not all charts are well below their major moving averages and are still heading south.
I am not interested in buying the T-bonds or the water index but the US dollar has been front and center in my portfolio for a while now. I started to jump on the dollar bandwagon (8/24/08: US Dollar Buy Signal and 12/17/07: US Dollar Snapshot) prior to its bottom in early 2008 and I am now interested in jumping on another train.
I mentioned my idea last week: Crude Oil ETN’s. My wife and I have agreed to start purchasing a stake in crude oil investments, starting this week with a 25% purchase of our fully anticipated position (DXO is the instrument). The crude oil charts have not turned positive and I have not received any buy signals such as the ones I highlighted in the dollar earlier this year but I am viewing this more from a value perspective rather than technical. Maybe I will strikeout big time but I am swinging for it anyway.
Too many Middle East talking-heads want to cut production and raise the price of oil. Maybe I am extremely early to this “rebound/ bottom-picking game” but I can’t seem to reason how oil will stay low for long (talking years here, not a short term position).
Saudi Arabia’s king says the price of oil should be $75 a barrel, much higher than it is now, but his oil minister indicated Saturday that no measures will likely be taken until OPEC meets again next month.
“We believe the fair price for oil is $75 a barrel,” he said, without saying how the price could be raised.
Iraqi Oil Minister Hussein al-Shahristani said on Friday that 80 dollars a barrel is a “reasonable” price for oil and that his country would support any OPEC decision to cut output.
“A reasonable price for oil is 80 dollars a barrel,” said Shahristani on arrival in Cairo to attend a consultative meeting by the OPEC cartel to study slumping crude prices.
“We have to make sure that produced oil is used for consumption and not for storing.”