Another mixed close for the stock market with the Dow Industrials and S&P 500 slightly lower but the Dow Utilities closed strong, up 2.24% on the day as they rallied sharply from support after the release of the FOMC minutes.
The market internals were positive and the S&P 500 joined the NYSE A/D line by making a new high with prices. The sharp drop in crude oil did not help the stock market and the HPI indicates the money flow is no longer keeping pace with prices. Therefore, the rally in crude oil (Crude Oil Money Flow Turns Positive) may be over.
The Sector Select Energy (XLE) was down 1.19% Wednesday and has a one-year performance of 3.95%. This is quite disappointing when compared to the 16.28% gain in the Spyder Trust (SPY) over the same period.
The February 14 Barron's article Avoid Big Oil presented their view that four of the largest oil companies-Exxon Mobil (XOM), Chevron Corp (CVX), ConocoPhillips (COP), and Royal Dutch Shell (RDS-A)-were priced for $80 crude so have little growth potential. Then, on Tuesday, filings by Warren Buffett's Berkshire Hathaway revealed that he had sold his entire $3.7 billion stake in Exxon Mobil (XOM).
Does this high degree of bearish sentiment mean that investors should be looking for a buying opportunity in these stocks? A look at the monthly charts will pinpoint the key levels where these stocks may bottom out.
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