Market Sector Investments: Equating Sector Study into Profits
By Bryan Bottarelli
In this article
Analysts like Global Insight's Kevin Lindemer don't think that gas will hit $3 this summer.
By mid summer? How does $4.50 sound, folks?
Here's what to buy as petroleum costs spike earlier than ever…
Market Movers: Buy Oil, Sell Retail and Big Pharma
I paid $2.79 for gas this morning. Now granted, it was not at the cheapest station around, but I was running late and didn't want to drive over the county line for my 10 gallons. But it wasn't at the rip-off station by the entrance to the highway leading downtown either.
So I am rather curious as to why certain analysts like Global Insight's Kevin Lindemer don't think that gas will hit $3 this summer. They claim that U.S. gasoline supplies should be ample enough this summer to keep prices relatively low. What's more, Kevin doesn't “think that oil prices are going to be a drag on the economy this summer.”
Quite frankly, I think that Kevin and his fellow travelers at the Department of Energy have been huffing low-test fumes. While I don't trust its forward-looking guesstimates one bit, DOE's Energy Information Agency is still useful for some things. For instance, a quick trip through its gas price figures reveals that prices have increased an average of 2.75% per week for the past eight weeks.
Market Movers: Gasoline Prices Will Beat $3 by Late Spring
You can also see that in 2005, gas rose 2.39% a week in March, and hit $3.11 by September. But that was just a news-driven fluke right? Yeah, well, March 2006 saw an average increase of 2.5% a week, closing out at $2.54, and we saw $3.04/gallon by July.
Read more… Get Market Report everyday! Sign up Free!
So why on earth is it forecasting prices to stop rising at $2.61 this year? Oh wait: it's in the tiny print: “Nothing will go wrong this year.” Riiight, because that's what always happens in real life.
Forgetting for a moment that I am already paying more than that already, at the current average rate of increase, the rest of you will see gas breach the EIA's cap by next week! As for $3, we could see that within six weeks. And by mid summer? How does $4.50 sound, folks? As I said, anyone who doesn't think that prices like that will impact other sectors is huffing fumes.
Market Movers: The Big Shock - Medical Stocks Aren't Delivering the Goods
Here's what to buy as petroleum costs spike earlier than ever: Chevron (CVX:NYSE). This one's easy: this one has a right to print money, and it is going to print as much as it can before the Democrats start investigating it for price gouging.
And here's what to sell: for starters anyone who sells stuff that working folks don't absolutely need to buy right now. That means companies like Wal-Mart (WMT:NYSE) and Time Warner (TWX:NYSE) are absolute poison right now.
But here's a victim I would have missed if it wasn't for the fact that its chart was dog ugly: Health and Medical companies like Johnson & Johnson have been underperforming the market for at least a year now. The entire sector's return on equity has been steadily eroding for a decade. Add in additional raw material and delivery costs, and a hurting customer base and things start to look ugly fast.
***
Adam Lass is the founder and manager of the WaveStrength Group, and is a contributing editor for Taipan Financial News. As the creator of WaveStrength's proprietary analysis system, Adam's expertise has shaped a franchise of successful investment newsletters and services, including WaveStrength Options Weekly and WaveStrength Apex.
Did you like this article? Get Market Report everyday! Sign up Free!
Related Articles
The Health Sector Isn't So Healthy: Or you could take my word for it, and find out how you could triple-digit gains off the drop to boot.
Consumer Stock Investing: As Good as It Gets
Economic Forecast: "Whip Inflation Now!" - Gerald Ford, 1974
Related Resources
Gasoline Prices: Don't take my word for it when it comes to gas prices. - EIA
Crude Oil: Or oil prices for that matter. - NYMEX
Health Care: And while we're at it, here are a bunch reasons why you run away from health stocks. - SPDR Index