Friday's trading in the E-Mini S&P 500 futures (Es) contract may have been subdued, but the activity in the energy pits, and in stocks closely associated with oil and gas, was anything but. In fact, I think it's fair to say Friday's trading in all things energy-related was downright scary.
Let's begin with an updated look at the daily volume profile for light crude oil.
When we last looked at the daily profile for light crude oil, I highlighted the fact that volume began trailing off beneath $71 per barrel. I opined that, in light of this, aggressive buyers might want to begin paying attention as crude probed prices between $65 and $68.
Unfortunately, crude closed Friday's session near its session lows -- near $66 -- displaying very little in the way of downside excess. While it impossible to pinpoint the low point of any declining instrument, I see no reason to assume that Friday's low represents a longer-term low in light crude oil futures. For now, I think our next downside reference point is the $62.15 low-volume node (highlighted in red on the chart above).
On a more positive note, this is a fantastic time for longer-term investors focused primarily on dividend-paying names in order to dig a bit deeper into a few specific issues. For example, Chevron (CVX), Helmerich & Payne (HP) and Exxon Mobil (XOM) have been increasing their respective dividends on a yearly basis for 27 or more years in a row. To put that in perspective, all three companies managed to increase their dividends through the 2000 dot.com collapse, as well as during the 2008-to-2009 financial collapse.
If you're looking for even more names to dig into, consider such stocks as Occidental (OXY), Murphy Oil (MUR), EOG Resources (EOG) and ConocoPhillips (COP). Each of these companies has increased its payout on a yearly basis for at least the past 12 years. To be clear, a number of other oil-and-gas related equities, and master limited partnership, that have been increasing their dividends annually for at least the past 10 years. I am simply offering the names of a few on my own watch list.
- The iShares Transportation Average ETF (IYT) has risen more than 20% since the fund bottomed out near $138 in mid-October. After the stock gapped considerably higher to begin last Friday's session, sellers stepped in against the IYT and ended up closing the ETF near the low of the day, filling the overnight gap. Within the transportation sector, we've seen continued buying among airlines and truckers, but Friday's bearish reversal in shares of railroading stocks currently threatens to derail the group as a whole. In my view, broad holdings in the transportation sector (via the IYT) will remain a risky proposition until prices are holding above Friday's $167.80 opening swing high.
- Please check Columnist Conversations prior to Monday's regular-session open for an updated Es volume profile and trade plan.