Monday, January 12, 2015

Retail Investors Have Been Buying Oil Stocks (XLE; XOP; HAL)

For probably-jaded long-time readers I apologize for dragging this old chestnut out of the memory hole but:

It's Too Early

For newer readers I did the "It's too early" schtick in October and November 2014 while waiting for a couple of the major oil & gas ETF's to visit two-year low territory. Here's the big dog, the Energy Select Sector SPDR Fund with all the behemoths from the S&P energy sector:
$74.24 Down 2.12 (2.78%) today.

And here are the pups, the S&P Oil & Gas Exploration & Prodction ETF:


$42.94 Down 2.32 (5.13%)on the day.
We're there and now I've got to say, ahead of earning and guidance season:

It's (still) Too Early
From Yahoo Finance:

Retail investors predict a bottom for oil
Armed with the information and technology to make moves quickly, retail investors are trading more and trading from anywhere they want. Nicole Sherrod, Managing Director of Trading at TD Ameritrade (AMTD) analyzed the trends of more than six million individual investors to find out what they’re buying and how they’re going about it.

During last month’s end of year rally, Sherrod saw TD investors tweak portfolios and take a step back. “In the last quarter, they started to slightly take their foot off the gas. As the market pushed up, they rotated out of some of the momentum stocks and into stocks with higher yield and lower beta.” Sherrod says clients were seeking to balance opportunity with restraint. “It seemed like a very strategic way to position themselves to still take part in the markets as they pushed to higher highs but also be a little more cautious.”

As oil prices plummeted, investors started buying more shares of companies with close ties to the industry. 

“At the end of the year the big story was energy. I think some of it was trying to call the bottom. They were looking at oil producers that paid a higher yield. I think that was a valuation play,” says Sherrod. Shares in the energy sector were the most popular purchase by TD Ameritrade clients in 2014. Buys of Halliburton (HAL), Chevron Corporation (CVX) and BP PLC (BP) all increased as their stock prices fell. ...MORE
Halliburton is interesting as a possible "tell" on the entire industry sector, more tomorrow.
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