S&P Energy Sector Can't Catch a Break

Even on a day when the Dow closed up nearly 300 points, the S&P 500 Energy sector still managed to close the day down.  Yesterday's declines for the sector mark its 7th consecutive down day, which is just the 10th 7-day losing streak since we have daily sector prices going back to 1989. 

As shown in the table below, 5 out of the 9 prior losing streaks saw declines on day 8 as well.  Following prior 7-day losing streaks, over the next week, the median change for the S&P 500 Energy sector has been -0.15%.  Over the next month, the median change has been +2.6%.  At some point, the knife has to hit the floor, right?

click to enlarge

Comments

[kebu77:]

Look for the sector to remain depressed past the election. Even though OPEC voted yesterday to reduce actual production by adhering to their existing quotas, the Saudis will likely continue to produce several hundred thousand barrels over their quota. They are playing the same game they played in 2004, producing way over their quota for several months before the election.

What happens after the election depends on whether their current production levels have stressed any of their fields and whether they see it in their political as well as economic interests to have the oil price rise rather than fall.

This political factor may be part of the reason why Charles Maxwell believes oil has further to fall, but will eventually go up to $300.

The Saudis are exceptionally good at keeping secrets; guessing is aided by heeding what they do, not what they say.

2008 Sep 10 10:36 AM