Saturday, January 20, 2018

A Big Warning Sign Is Flashing

Some of you may be familiar with the 200-day moving average ("DMA"). This indicator is considered a rough gauge of the market's long-term trend.
During bull markets, stocks tend to spend most of their time above the 200-DMA. During bear markets, they spend most of their time below it. And perhaps most important, stocks rarely stray too far from this line in either direction before returning to it.
The following chart of the S&P 500 Index shows how it works. As you can see, since stocks moved back above this trendline following the financial crisis in 2009, they have rarely traded below it...
You'll also notice that whenever stocks have rallied significantly above this line, they have eventually come back to "test" it – touching it or even moving below it briefly – before continuing higher.

Which brings us to today...

Right now, the S&P is nearly 12% above the 200-DMA. And it hasn't "tested" it in more than a year.
This is unusual... In fact, the market has only been this stretched above the 200-DMA three other times since the rally began. And each of those cases preceded a sharp correction over the next few months.
As always, we never recommend making investment decisions based on indicators alone. And like the RSI extreme we mentioned earlier, this is not a precise market-timing tool. Today's extreme could become even more extreme in the near term.
But history is clear: It's simply a matter of time before the market returns to its 200-DMA. And like a rubber band, the further it stretches, the sharper that move is likely to be.

Again, none of these warning signs are a reason to panic...

As we've discussed, several other indicators continue to give the "green light" today. This suggests the next correction is likely to be another buying opportunity rather than the start of a true bear market.
But even if  a serious crisis is approaching, selling your stocks now could be a terrible mistake...
Now... I've done my best to show you the macro framework as I see it... I hope you understand why it's particularly important this year. But honestly, it really shouldn't matter all that much to your investment strategy.
Why not? Because you can't know if I will be right and a bear market will develop soon. And even if I'm 100% right, you could still easily make your biggest gains of this cycle in the final few months of the bull market.
In other words, even if there is a bear market and even if the markets as a whole end up down for the year, you could still make a lot of money by simply following your trailing stop losses and hanging on as long as you can.
So while I think you should be aware of these macro risks... and while I believe they're even more important this year than they have been in more than a decade... I think it's far more important that you simply follow sound investing principles, rather than try to time the market.

Wednesday, January 17, 2018

Oil Is Too Expensive

Is it time to sell oil? Is the recent rise too bubbly? Can it rise even more? Well, it can rise more, but it is too frothy at the current moment. 

Last week, West Texas Intermediate ("WTI") crude – the U.S. benchmark for prices – passed $63 for the first time since Porter issued +his warning in 2014.
The latest highs followed news that U.S. oil inventories fell for the eighth straight week. They now sit at their lowest level since August 2015.
While this suggests that OPEC's plan to reduce the global glut has been working better than expected, there are now signs that it may have gone too far.

Most important, at current prices, almost all U.S. shale producers can earn a profit...

So we'd expect to see both production and "hedging" to lock in higher prices begin to ramp back up. And that's exactly what has happened...
The oil "rig count" – the number of rigs actively drilling for oil in the U.S. – has been rising again. U.S. firms added 10 oil rigs last week, for a total of 752 active rigs, according to oil-services provider Baker Hughes. That's the biggest weekly increase since last June.
Meanwhile, news service Reuters notes that U.S. shale firms added more than 144 million barrels of oil to their hedges over the last quarter. According to the U.S. Energy Information Administration, this all but guarantees total U.S. production will rise to a new all-time record of more than 10 million barrels per day this year.

But that's not the only reason for concern...

Today, traders are incredibly bullish on oil again.
Regular Digest readers are familiar with the Commitments of Traders ("COT") report. This report is published weekly by the U.S. Commodity Futures Trading Commission, and shows the real-money bets of futures traders across dozens of asset markets.
And according to the latest COT report, speculative traders are now more bullish on crude oil than ever before in history.
As we often say, if there's one constant in the financial markets, it's this: Popular investment ideas are usually losers. Whenever the "crowd" is heavily betting one way, it's often a good time to take the other side of that bet.

In short, we now have similar conditions to those that led to the last plunge in crude...

In its quest to stabilize the market, OPEC has thrown a lifeline to even the most troubled U.S. shale firms. They can now ramp up production again – thanks to hedging – continue to produce even if prices begin to fall.
Meanwhile, speculative traders have gone "all in" on oil, and will likely rush for the exits at the first sign of trouble.
It's a near-perfect recipe for lower prices.

Thursday, June 15, 2017

Oil At $500 Per Barrel!


Hi, Jared Kelly here...
Wednesday night is sure to go down in Stansberry Research history.
I know some folks didn't make it, so let me recap it briefly for you here...
I sat down with our founder and CEO Porter Stansberry, and the newest talent Porter has recruited to his team, Flavious Smith Jr.
The event was called Oil $500: How to Make a Fortune From the Biggest Event in the Oil Business in 50 Years.
The purpose of the event was to address (and help subscribers understand) one of the biggest stories in the financial markets of the last two years -- the complete collapse of oil prices and the devastation that's wiped out dozens of companies in the oil patch.
Because if you've been watching the news, the picture you see probably make very little sense...
After all, just two weeks ago OPEC announced that they would extend oil production cuts to help stabilize the price of oil.
But then last week, oil prices slid down 5% in a single day.
That was because the Energy Information Agency published their weekly report that oil in commercial storage in the U.S. actually increased when it was expected to decrease last week.
Yet the EIA also expects storage to decline by more than 12% in the next 12 months.
So the big question we had on Wednesday night was...
Has oil formed a bottom?
Or will things get worse in the oil sector before they get better?
As investors -- what should we do today?
Because as any investor with experience in commodities knows, if you time the cycles right -- you can make an absolute fortune.
In fact, many of the biggest gains in our firm's history have come from this sector. I'm talking about recommendations like:
  • Seabridge Gold -- 995%
  • Silver Wheaton -- 335%
  • Jihshan Gold Mines -- 339%
  • Petrobras -- 123%
  • Carbo Ceramics -- 143%
  • Targa Resources -- 138%
  • Exelon -- 129%
  • Natural Resource Partners -- 186%
In many cases, those gains were realized in months not years -- which is why for the last 18 years, Stansberry Research has always had a heavy focus on this sector.
And it is why we've been sounding the alarm in recent days...
Because everyone got a first-hand look at an opportunity that is shaping up to deliver gains just like these.
Porter talked about...
  • The global event that will push oil to $500 over the coming years.
  • The PERFECT moment to position yourself for potential 1,000% gains.
  • The two best places to put your money to work right now.
  • And a small firm that could become the largest oil company in the world within ten years.
Now these claims may be difficult to believe....
But if you're a longtime Stansberry reader then you are probably aware that Porter has an extensive track record of making predictions which seem "extraordinary" at first, but come true faster than anyone can expect...
For instance...
Porter was widely praised for predicting the bankruptcy of companies like General Motors and America's biggest mall owner -- General Growth Properties.
He warned investors to avoid Fannie Mae and Freddie Mac during the housing bubble -- correctly predicting both would go out of business -- something that was unthinkable at the time.
Porter was also one of the only analysts in the world to warn investors as far back as 2006 that the idea of "Peak Oil" was a myth.
He was one of the first analysts in the world to talk about the vast resources in the Eagle-Ford and the impact that shale oil and horizontal drilling would have on the worldwide oil supply.
He correctly predicted that the U.S. would become the biggest producer of oil in the world and said that would send prices crashing to $40. At the time, oil was trading at what $120 a barrel and no one could even fathom it falling below $100.
And for more than a year, Porter has been sounding the alarm on auto-loans and the impact they would have on companies like GM, Ford and Hertz (a story playing out in financial news today.)
The point is, we don't know anyone who has more accurately predicted the big swings in oil prices over the past 10 years or more.
That's why it generated so much buzz on Wednesday when Porter revealed his newest thesis: OIL $500.
But Porter also shared an interesting twist to this story...
Yes, there are several incredible opportunities in the oil patch today, but according to Porter, there's going to be a big event not too far in the future, that will create dozens more opportunities just like he sees today.
As Porter said Wednesday...
"I'm trying to teach people that what they want to be ready for is the bottom in oil, not be excited by the top. And so we're very interested in watching production come up, watching storage come up, watching prices go down, because we're interested in finding that point where we know that producing oil is no longer economic.
Not everything gets cheap at the same time. So you want to buy good assets when they become cheap.
Right now, there are several opportunities we like -- opportunities we would happily buy today. We'll tell you about those in just a minute.
We want to buy these assets when magazines are saying there's no future for oil on their covers.
Which is the exact situation we have today.
But there are others that we know we'll be able to get a better price if we wait, when they become more hated.
We use many indicators to judge the health of the market.
There is no one surefire way to know if oil prices have bottomed.
That's why it is so critical to get natural resource assets at a good price during a downturn.
You need someone with expertise - someone that has enough experience to know what something is worth.
And that's why I'm investing heavily in building a team of top-notch oil analysts right now, today.
Because we need to be ready when the opportunity comes, and we need to be able to deploy cash decisively.
And that's one of the reasons I asked Flavious to come work with us -- there's few people in the world that know the oil business like he does."
In other words, Porter explained that he's gearing up for the next oil supercycle, and he's putting together the expertise to take advantage of it when the moment is exactly right.
Porter even shared his most important indicators, which will signal the perfect moment to jump into oil investments.
He shared them live for everyone to see... but if you didn't have a chance to attend, don't worry.
I'll give you the full list right here.
But first, let me briefly tell you about the newest talent to join the Stansberry Research team...
Introducing Flavious Smith...
Flavious Smith Jr. is a 40-year Texas oil veteran and successful entrepreneur.
After earning his B.A. and M.S. from Vanderbilt University, Flavious played a short stint as tight-end for the Denver Broncos, before leaving the team to earn his JD from the Oklahoma City School of Law - the foremost oil and gas program in the country at the time.
Before joining Stansberry Research, Flavious most recently served as the Chief Oil and Gas Officer and Executive Vice President at Forestar Group (NYSE: FOR), where he grew the value of their oil and gas division from $30 million to $312 million in seven years.
Flavious has expertise in engineering, geology, geophysics, land, and operations... and has worked on projects in the Anadarko, Appalachian, Denver-Julesburg, East Texas, Gulf Coast, Hugoton, Permian, Powder River, Uinta, Wind River, and Williston Basins.
But today, Flavious has joined Porter's team to write Commodity Supercycles -- our publication dedicated to finding opportunities where "boom" cycles in natural resource markets can deliver gains of 1,000% or more.
Flavious decided to join Porter's team -- in large part -- due to their shared thesis of where oil prices are going next.
In fact, there isn't a single other analyst we know of in the financial community who shares their view.
  • Business Insider says that oil prices could stay low for another 3 years.
  • Fortune says it will take 5 years for prices to recover...
  • Goldman Sachs analysts get paid a lot more -- so they're predicting that prices could stay this low for the next 15 years.
But Porter and Flavious completely disagree.
The cause of every bust is the same -- oversupply.
And the cure to low oil prices is always the same too -- lower prices.
Just consider what's happened in the last few years to companies in the oil business.
The following chart from bankruptcy-law firm Haynes and Boone shows how many companies have gone bankrupt in the oil sector since the beginning of 2015...
As you can see here, when prices fell to as low as $27 a barrel last year, revenues dropped, and debt crushed many companies. A wave of bankruptcies swept across the industry. 
In total, 114 exploration and production ("E&P") companies declared bankruptcy from January 2015 through last December.
The combined debt for these companies totaled more than $74.2 billion. Over the same period, 110 oil field-services companies went belly up... with total debt of more than $18.8 billion. 
That's 224 bankruptcies and $93 billion in debt.
But as Porter and Flavious put it, "we're just getting started..."
Despite the wave of bankruptcies that hit the sector last year, crude in storage is at an all-time high.
Take a look at this chart from the EIA...
It shows the number of days of crude oil in storage in the U.S.
And as you can see, we currently have levels of oil in storage since 1984...
Just before oil prices shot up over 250%....
These two charts -- showing record oil bankruptcies and record oil storage -- are two of the indicators Porter shared on Wednesday night that always precede "boom" cycles in oil.
Yet, as Porter and Flacious predict, you'll see another massive wave of bankruptcies before the oil and gas sector emerges from this ongoing bear market.
The continued drilling and near-record production will keep driving oil prices lower. The companies with higher costs and big debt loads will become the next victims. 

Two months ago, Flavious attended the Oil & Gas Investment Symposium in New York.
More than 70% of the companies presenting had debt levels that exceeded their market caps
Things won't end well for these companies
But therein lies the opportunity today...
Because when the next (and final) wave of bankruptcies hits the oil sector during this cycle, debt-laden companies are going to hand over their valuable assets to savvy investors at pennies on the dollar.
Yet, the market isn't planning for this...
You see, Porter and Flavious talked on Wednesday night all about a new idea that has become popular on Wall Street...
An idea, called "Peak Oil Demand."
In fact this idea recently appeared on the front page of the Wall Street Journal, under the headline, "Get Ready for Peak Oil demand."
This idea probably sounds familiar to you because of another wildly inaccurate and popular myth from ten years ago...
I'm talking, of course, about "Peak Oil."
For a few years in 2005 and 2006, Porter spent hours each week explaining basic economics to subscribers - that higher oil and gas prices would encourage capital investment in new technologies and new resources... and that sooner or later, there would be a new oil glut, just as there has been every 20 or 30 years in the oil business.
Well... what's happened since? I'm sure you know. As it always does, the free market worked its magic.
But the reason "Peak Oil" was a dangerous idea, is because if the idea were true... investors (and banks) could safely allocate almost unlimited amounts of capital to oil exploration and production projects.
No matter how much capital you invested in it, oil production rates would never increase again.
Many large investors believed that oil represented a "one-way" bet.
Today, the Wall Street Journal says we have another "one way bet"...
"A consensus is growing that fuels demand for passenger cars could fall as... electric vehicles gain traction and the internal combustion engine gets re-engineered to be dramatically more efficient."
In other words, the world will never need as much oil as it does today.
Well, Porter and Flavious are taking the other side of this bet.
Just as nobody believed Porter in 2011 that U.S. oil production would triple in 10 years (it did in just 6 years), and just as no one believed Porter in 2012 when he warned that oil prices were going to crash to $40 (they bottomed below $30), I'm sure many won't believe what Porter is saying today either.
But according to Porter, we'll soon see a bottom in the oil market.
Porter calls it his "magazine indicator."
He saw the same thing happen back in March of 1999...
The Economist boldly proclaimed on the cover at that time that the world was "Drowning in Oil."
Just as today, nobody thought prices would ever go higher again...
Yet that was precisely the beginning of oil's next "boom" cycle, which saw oil prices rise 1,000% over the next decade.
A few years later, The Economist got it wrong again, when it too bought into the "Peak Oil" myth.
Well, can you guess what the Economist is predicting now?
Take a look...
The point Porter stressed on Wednesday night is that when it comes to commodities, you can't wait for things to start looking better.
You need to invest when the market believes things are never going to get better.
That's why it is critical to position yourself today for the next oil supercycle.
Before the market sees the opportunity we see today.
In fact, a number of private equity firms -- aka the "smart money" in Wall Street - are doing just that.
In the past 18 months alone...
  • Private Equity firm, Blackstone Group scooped up oil and gas assets, including vast acreage in the Permian basin, to the tune of $1.8 billion.
  • Chrysoar, an oil company backed by private equity firm EIG, acquired oil and gas assets in the North Sea from Royal Dutch Shell at a cost of $3 billion.
  • Warburg Pincus, the New York firm where former Treasury secretary Tim Geithner works, has its eyes set on the northern Delaware Basin, where it has deployed $500 million for oil assets.
  • And Private Equity firm, Neptune Oil & Gas bought a majority stake in a French exploration and production business for $3.9 billion.
It's clear that private equity firms, are buying up oil assets as fast as they can...
Possibly because of another indicator Porter shared on Wednesday night, that has been powerfully predicative for identifying past boom cycles...
Let me show you what I mean...
The following shows the commodity-to-stocks ratio over the past 47 years, a gauge of how expensive stocks are relative to commodities.
As you can see this ratio sits at an extreme only seen twice in the last 50 years.
And both times this ratio hit this extreme in the last 50 years, it was followed by a "boom" cycle in oil prices.
In fact, it is now even lower than either of the previous two bottoms...
The last time this pattern appeared -- in 1998 -- the price of oil absolutely skyrocketed... from $12 per barrel to more than $140 per barrel.
Exxon-Mobile stock doubled and dozens of tiny exploration firms exploded 876%... 1,821%... even 10,000%!
It's a move we've only seen twice in the past 50 years -- and, as you can see from this chart, now it's happening again.
Gains of 1,000% or more wouldn't be unusual going forward following an extreme like this.
But according to Porter and Flavious, it's not going to be the companies you think that will benefit most from the coming boom.
Often small producers and exploration companies are the biggest winners.
Flavious ran a screen on Wednesday night to show the biggest winners after this ratio last hit an extreme in 1998.
You probably don't know many of the names on this list.
But had you put $1,000 in each of these oil and gas companies the last time this ratio hit this extreme consider how much you would have made...
A thousand dollars in Earthstone Energy (ESTE) would be worth $100,000 today...
A thousand dollars in Southwestern Energy (SWN) would be worth $60,600...
A thousand dollars in Carrizo Oil and Gas (CRZO) would be worth $51,447...
A thousand dollars in Range Resources (RRC) would be worth $42,045...
A thousand dollars in Petroquest Energy (PQ) would be worth $31,640...
A thousand dollars in Comstock Resources (CRK) would be worth $28,082...
A thousand dollars in Denbury Resources (DNR) would be worth $25,556...
A thousand dollars in Panhandle Oil and Gas (PHX) would be worth $22,596...
A thousand dollars in PDC Energy (PDCE) would be worth $20,870...
A thousand dollars in Hollyfrontier Corporation (HFC) would be worth $18,211...
A thousand dollars in Vaalco (EGY) would be worth $14,800
A thousand dollars in Apache (APA) would be worth $13,925...
A thousand dollars in EOG Resources (EOG) would be worth $13,562...
A thousand dollars in SM Energy (SM) would be worth $13,118...
You get the point...
Of course, historial results should never be misconstrued as a guarantee for future success and it's important to consider the risk before making any investment.
However, there's no better way to make extraordinary gains relatively quickly than investing in small firms at the start of a commodity supercycle.
At least, that's been the case for lots of Stansberry Research readers who have got into commodity "boom" cycles like this one in the past...
Jim T. who sent us this letter...
"I first bought SLW after reading about it in... the Oil Report. I bought it twice in '08 and sold 1/11 for a 392% profit. This is one if not the best investment I've made but these stocks can also be volatile so you must get in when the prices are beaten down."
And here's a good one from Chalene T. who made a bundle in oil and gas...
"I am one of your "small" investors, "senior" senior citizen, late to investing in the stock market. Your advisories have been my "education" and I've done quite well for a novice... I'm at 300% for LNG and 200% for TRGP."
Or David G. who sent us this letter...
"Today it is priced at $5.36 per share giving me a profit of $306,000... I not only want to thank you, I want to take Porter to dinner."
David B. simply wrote...
"Has been like a slot machine, I put my money in and in pays out."
Hopefully by now, you understand that we see an opportunity in the oil sector today that only comes along a handful of times every century. And you can imagine what nailing just one oil "boom" cycle in your lifetime could do for your retirement.
Porter and Flavious shared their exact projections for where they think oil will go during Wednesday night's event, and the numbers were pretty exciting.
There's a lot that went into it, but the most important thing to understand is that Porter and Flavious looked back at the super "boom" cycles in oil of the past.
And based on past cycles, and current conditions, they expect oil to decline again to $40 a barrel before we see a true bottom in oil prices.
And from there, they see oil going to $500 over the next decade -- a 1,150% increase.
Of course, as Porter shared with viewers, the big winners won't be companies you've heard of today.
Super "boom" cycles in oil can supercharge your gains, but only if you know what tiny firms are best positioned to take advantage of the next boom.
That's one of the reasons why we're so excited to have Flavious join the team.
As I mentioned, before joining Stansberry Research, Flavious most recently served as the Chief Oil and Gas Officer and Executive Vice President at Forestar Group (NYSE: FOR), where he grew the value of their oil and gas division from $30 million to $312 million in seven years.
He's done just about everything you can in the oi business from drilling wells to writing and negotiating contracts worth hundreds of millions of dollars.
His family has lived and thrived Texas for nearly 100 years, when they first got into the oil business.
In short -- he know the players and he knows the game.
That's why Flavious is going to be leading this effort with Porter to help readers capitalize on the coming oil "boom" cycle.

Monday, May 22, 2017

Wednesday, May 17, 2017 saw the biggest drop in the stock market so far, this year. Here is a reason to be optimistic Below is a message from expert Steve Sjuggerud:

After a one-day fall of 1.8% or more, like we saw on Wednesday, the stock market outperformed over the next year. Take a look:

Since 1950
After a 1.8%-plus
one-day fall
All periods
1 month later
3 months later
6 months later
12 months later

This was based on data going back to 1950. But looking closer, I noticed that most of the recent occurrences were clustered around turning points in the market.

So I ran the numbers again, using 1980 as the start date. (Also, 1982 or so was the start of the "great bull market" that lasted until the year 2000, so the returns for "all periods" starting from 1980 will be better than they were in the table above.) Take a look:

Since 1980
After a 1.8%-plus
one-day fall
All periods
1 month later
3 months later
6 months later
12 months later

When you change the start date to 1980, the picture changes a little…

The story stays the same for the one-month and three-month periods… Stocks outperform over the next one to three months after a big one-day fall.

But then the outperformance disappears over the longer run.

So should you be worried? Not at all. The financial media might make noise about one-day falls like this… But as you can see, the results from similar events in the past 30-plus years are far from frightening.

It seems that a one-day occurrence by itself is nothing to worry about… Stocks have typically outperformed in the months following a big, bad, one-day move.

Wednesday's move scared a lot of people… Don't let it scare you…

Good investing,

Further Reading:

"Stocks just fell for six days in a row," Steve wrote in March. This rare signal doesn't happen often... but it has never been wrong over the past 60 years. Learn happens next, and what it means for investors, right here: Stocks Just Fell Six Days in a Row... Here's What Happens Next.
"The current eight-year-long bull market – which came after a memorable and painful crash – has most people nervous," Ben Morris writes. But stocks are one of the best places to make money today... And risking less up front is one of the best ways to invest with confidence. Read more here: Are You 'Stock Shy?' Don't Be.

Wednesday, February 8, 2017

A Golden Opportunity

Image result for gold

Is It A Good Time To Buy Gold?

Gold is all the rage this year. It currently is surging ahead after a major fall in November 2016. But did you know that there is a huge gold mining facility that is ready to explode in value? This company (Northern Dynasty Minerals) is poised to open what is regarded as the largest gold deposit in the world. Development has been held back because the Environmental Protection Agency (EPA) halted their efforts in 2014, due to potential harm to the world's largest sockeye salmon fishery in Alaska. Over 500 million dollars has been spent on this project. 

Image result for investing

This year, Northern Dynasty Minerals is expecting a turn-around. Though they are limited in expertise and finance, they expect to find a new partner by October, this year (2017). They are also pushing for the EPA to reverse it's stance, allowing development of the gold deposit. With most millionaires and billionaires in a wait-and-see mode, now is the time for us regular guys to invest and beat them to the punch. Once they jump in full speed, the stock price could jump to as high as $10 per share within the next year or two. As of this blog, the price is around $3. That's right. You could triple your your money in the next 2 years or less. However, this is speculative investing. Use your own judgement. In the meantime, if you are thinking about investing in gold, keep an eye on Northern Dynasty Minerals (symbol: NAK). Happy investing!