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Snow? In New York? In January? Couldn't Be...
Dear American Capitalist Reader,
Yep, that white stuff falling from the sky over New York was, in fact, snow. It took three weeks for winter to get here, but snow finally fell from the sky after Saturday’s absurd warmth. Sure, the snowstorm lasted a whole 15 minutes, but winter is finally rearing its head.
According to Chief Forecaster Joe Bastardi, as referred to by AccuWeather.com, “the weather pattern from mid-January through mid-February has a chance to mimic the winters for 1965-66 and 1957-58, each of which ended cold and stormy after a warm start. A worst-case scenario would be if this winter plays out as did the winter of 1977-1978. Similar to this year, 1977-1978 was a winter with a waning El Nino. After a tepid start, the second half of the winter was noted for its cold and remarkable storminess, including back-to-back-to-back blizzards in the Northeast.” He continued, saying, “Those who think that winter 2006-2007 is going to remain mild are in for a shock. Winter is likely to come with a vengeance. A week from now, we'll start seeing truly cold air across much of the country, and we expect this change to last.”
With that in mind, you may want to use the recent oil weakness as a buying opportunity. As soon as old man winter rears his head, oil will rise just as fast as it dropped. But he doesn’t seem to be in any rush to get to the Northeast. As it stands right now, the Northeast is warmer than usual because the jet stream is running farther north, blocking the usual cold arctic air from Canada, and then there’s El Nino. But it’s not likely to last much longer, according to the AccuWeather report.
Here’s the bottom line on energy: The group is extremely oversold at this point on overreactions, which could spark a quick short-term bounce. Technically speaking, smart traders may rush to buy the likes of the OIH on the cheap given the oversold conditions, a doji cross sitting just below the lower Bollinger Band, and the extreme oversold read on the W%R.
The warmth was good while it lasted… but we may in store for a heck of cold February.
Stay warm,
Ian L. Cooper, Editor, Early Alert Trader
