Energy sector carnage

Despite being just a half day, it was one of the most interesting trading days of the year. With Oil in collapse mode, the energy sector stocks were similarly getting destroyed. Outlook into year end offers little hope that a key floor is near.


WTIC, monthly'2, rainbow

Summary

With the break of WTIC Oil $90 support in early October, the 65/60 zone seemed the obvious target.. and to my own surprise.. we're already about there.. with still one month left of the year!

Frankly, with Oil in the mid $60s, it is now starting to become clear that the 50s.. even 40s are viable next year - more likely in second half (after a spring bounce from 60/55 to 70/80).

So long as Oil remains weak... energy stocks are naturally going to remain under severe pressure. Q4 Earnings (due Jan'2015) are going to make for real interesting reading!

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*normally, I would cover individual stocks on my 'fair value' page, but.... on this occasion... lets take a look at four particularly notable ones...

Devon Energy (DVN)

Massive break... with a black-fail candle just recently. Key downside is $40.. but that is going to take some months.


Chesapeake Energy (CHK)

A huge Friday decline of -12.1%. A break under the recent low of $16.69 will open up the $12s, where I would expect a key floor to be put in.


Transocean (RIG)

Approaching target zone of $20/17... worse case.. (if Oil $40s next summer/autumn).. $10


Seadrill (SDRL)

Approaching target of $12.... 10 now seems likely. The dividend looks unlikely to be (even partly) reinstated until Q4 of next year.... I don't think Mr Market has fully priced that in yet.
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Have a good weekend

Goodnight from London
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*the weekend post will be on the World monthly indexes