Tuesday, April 14, 2015

Forum Energy Technologies Inc (NYSE: FET)

Forum Energy Technologies, Inc. designs, manufactures, and distributes products to the oil and natural gas industry in the United States and internationally. The company operates in two segments, Drilling & Subsea, and Production & Infrastructure. The Drilling & Subsea segment designs and manufactures products, and provides related services to the subsea construction, drilling, well construction, completion, and intervention markets. The Production & Infrastructure segment designs and manufactures products, and provides related equipment and services to the well stimulation, production, and infrastructure markets.
Take a look at the 1-year chart of Forum (NYSE: FET) below with my added notations:
1-year chart of Forum (NYSE: FET)
After FET’s 6-month decline, the stock began a rally. During the most recent 4-month stretch the stock has had a tendency of creating support and resistance levels at the increments of $2 (blue). For example, the most recent level of resistance was at $20, and that level was also a brief support once the stock broke above it. Next, $18 has popped up as both support and resistance as well. Lastly, both $16 and $22 have also been key to the stock.

The Tale of the Tape: FET just broke back above $22. A long trade could be made at that level with a stop placed under it. A short trade could be made on a break below $22 with the expectation of a fall down to the next $2 level at $20.
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4 Month Market Forecast – Gold, Oil, Stocks & Bonds

Everyone is looking for the holy grail of the financial market which will tell what will happen next in stocks, commodities, bonds etc… Knowing that the holy grail of trading does not exist I am going to step out on a limb and share my four month stock market forecast along with commodities and bonds.
It is vital that you understand this is a 2-4 month forecast only and as the market evolves my outlook will change as I follow price action as closely as possible.
Here are some key points you need to know:
  1. Bonds should perform well for a few months and possibly a long time until the bear market in US stocks takes hold and is well under way. BUT, the bond bubble will burst eventually when rates start to climb. This could be June, or much later in the year but until then I expect them to rise as the safe haven.
  2. Commodities typically outperform equities during the late staged of the bull market which is what I feel the US stock market is. Resource stocks and resource rich countries like Canada should hold up well, and possibly make new highs going into summer.
  3. Notice how gold and oil have moved from opposite corners of the chart compared to the US and Canadian stock indexes.
  4. During the 2000 and 2008 bear market we saw gold, silver, oil and mining stocks get hit very hard in the second half of the bear market. Will this happen again? I do not think it will because this time rates are at zero and there is only one way to go when they are at the bottom… Up!. This means stocks and bonds will likely both enter a bear market, maybe not at the same time, but they will eventually. This means the only places to protect your capital will be commodities, resource based investments, or simply cash CAD & USD.

Take a look at this 10 year bond price overlaid on the S&P 500 index. So far this year bonds have popped and rallied above short term resistance which we have seen in the past. Big money is rotating into bonds for the time being and this is a warning sign of a stock market top.

Market Forecast Conclusion:

In short, safe havens for investor’s capital will be more of a dance during the next bear market in US equities.
With many countries devaluing their currencies and a potential bull market in commodities I expect the Canadian Loonie and US Green Back to hold the value if not rise over the next year or two.
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Philip Morris International (NYSE: PM)

While most cigarette stocks had a successful 2014 on the charts, the sector behemoth by market capitalization -- Philip Morris International (NYSE: PM), weighing in at $120 billion -- headed mostly south. Through its April 1 low, it shed 18% from its June 2014 peak above $91.

The good news is that PM reached long-term support from its 2013 low and, arguably, the bottom of a giant trading range originating in early 2012. The question for traders is whether this support will hold, and there are many reasons why I think it will. (more)

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Prepare for a Summer Gasoline Rally?

Gasoline demand in the United States typically peaks in the summer months as people emerge from their winter hibernation, take vacations and just drive more in general.  Additionally, US regulations require a summer fuel blend that is more expensive to produce.  The combined factors of increased demand and a more expensive product can often lead to spikes in price.  However, given the unique situation of crude and gasoline stocks this year, should traders anticipate rising prices?
Crude oil prices have fallen dramatically since late 2014, as fracking production has helped to rack up record supplies.  Today's WTI crude prices are about half what they were last year at this time: 
  chart provided by Barchart.com
According to the EIA, crude oil stocks continue to build and we remain well above the five year average, with total stocks at 482.4 million barrels, compared with 384.1 million a year ago. (more)

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