The Rude Awakening
Wall Street, New York
Thursday, October 12, 2006 ------------------------- - The difference between the recent moves in the coal
and oil markets and how to invest accordingly,|
- Funneling Wall Street's record profits into your own
back pocket,
- The different shapes and sizes of the many available
bottoms, all the market data and plenty more...
------------------------- Eric Fry, examining bottoms from Laguna Beach, reports... Some bottoms are better than others. Some are very well-defined; others less so. Some are as
chiseled and symmetrical as a flawless diamond; others are
as broad and irregular as a prize-winning pumpkin. Almost everyone agrees what a perfect bottom looks
like...and that a perfect bottom is thing of beauty. But
less-than-perfect bottoms tend to stir up debate. When it
comes to less-than-perfect bottoms, beauty is in the eyes
of the beholder. Some of us, for example, are attracted to
very narrow bottoms...others of us derive more comfort from
substantial, wide bottoms. The problem is; if you chase after the wrong bottom, you
might very well lose your ass...as we explain in the column
below. --- Special Report ---
HOW TO FUNNEL SOME OF WALL STREET'S RECORD
Q1 PROFITS INTO YOUR PERSONAL ACCOUNT One Wall Street firm after another is reporting record
profits right now: Merrill Lynch, Goldman Sachs, Deutsche
Bank... the list goes on. Bloomberg says the main reason
behind these runaway profits is that the institutions are
now trading more of their own money - up to $8.6 billion
PER HOUR - than ever before. In fact, according to one source, institutions could drive
nine stocks through the roof just days from now, starting
with a series of "buy" orders worth $19.8 billion dollars.
Click below for a free report on this historic opportunity. http://www.isecureonline.com/Reports/MAL/EMALGA02/ ---------------------------- Nice Bottoms
By Eric J. Fry Some bottoms are better than others. Some lead to
substantial capital gains; others merely deceive investors
and lead straight to capital losses...because they're not
really bottoms at all. They just appear to be. The charts below depict two different bottoms, or POTENTIAL
bottoms – one in the coal sector and one in the oil
refining sector. We find the latter of these two potential
bottoms to be more alluring than the former. Here's why:
Oil refining margins have stopped falling; coal prices
haven't. Since topping out in early August, The S&P Coal Stock Index
and the S&P Oil Refining Index have both tumbled more than
22%. And both of these indices are attempting to "bottom
out." We are psychologically prepared to embrace either
one, or both, of these potential bottoms. But for the
moment, we prefer the bottom in oil refining. 
The coal sector's potential bottom features a "capitulation
low" on September 25th that survived a "re-test" on October
4th. Yesterday's big-volume rally suggests that the worst
might be over for now. However, the buyers of coal stocks
will want to keep an eye on coal prices. Even though stocks
like Peabody Energy (NYSE: BTU) have jumped 20% from their
September 25th lows, coal prices continue to slip. Such
price divergences do not necessarily doom a rally
attempt....but neither do they instill confidence. In other
words, the price action in coal stocks like Peabody
suggests that coal prices will also begin to rally
relatively soon. But if coal prices don't soon recover,
Peabody's rally attempt will quickly fizzle. 
Meanwhile, the bottom that appears to be forming over in
the oil-refining sector seems a little prettier than the
coal sector's. Like coal stocks, oil refining stocks dove
to a capitulation low on September 25th. Similarly, oil
refining stocks re-tested their lows on October 4th and
have been attempting to rally ever since. Unlike coal
stocks, however, the rallying oil-refining sector enjoys
visible fundamental corroboration: Refining margins are
also moving higher. In fact, if you examine the right-hand
side of the chart below, you will notice that the rising
refining margins are actually LEADING the rising price of
oil refining stocks. 
Since hitting a low of $3.69 a barrel on September 20th,
average national oil refining margins have rebounded to
$6.24. (I.e., oil refiners gross $6.24 for every barrel of
oil they refine into gasoline and other distillates).
That's a far cry from the $20-a-barrel they were earning in
August. But at $6.24 a barrel, oil refining remains an
extremely profitable business. And yet, most of the major
refining stocks like Tesoro Corp. (NYSE: TSO) sell for less
than six times earnings. For perspective, the S&P Coal
Stock Index sells for 18 times earnings – or three times
the valuation of the oil refining stocks. If you're gonna chase after bottoms, therefore, why not
chase after the bottom in the oil-refining sector? [Joel's Note: Being a twenty-five year old male in New York
City, we have availed ourselves to far too many cultural
activities to boast any credible aptitude in the bottom
coinsurer department. We prefer to leave such pursuits to
the discerning, seasoned intellect of our senior
editors...until we can learn more about the art form
therein, of course. It is imperative, as any sound trader will counsel, to
acquire a radar system to detect bottoms you are willing to
invest off. Solid technical fundamentals are the building
blocks of any good trade and nobody is more acutely aware
of this than the Maniac Trader, Kevin Kerr. A regular on
MarketWatch and a revered analyst, Kevin has seen the best
and worst of the bottoms...and tops. Specializing in the
resource sector and focusing on delivering profits on both
ends of the graph, Kevin's weekly market alerts have paid
out big for enthusiastic readers. If you missed yesterday's investment alert from the
commodity front, be sure to check it out below. Kevin's
trade alerts are concise and easy to follow. So how easily
can you get started? Just one click away:
Resource Trader Alert -
http://www.isecureonline.com/Reports/RTA/ERTAG613
--- Special ---
100% Accuracy... With Average Gains of 100%!
Your Chance to turn $5,000 Into $1 Million With the Hot
Streak of the Decade If you were one of this hotshot analyst's loyal readers in
2005, you would have had a chance to make money on every
single one of his recommendations. And not just small gains, either - the average gain was
100%. Catch this streak while it's still hot - and learn
how quickly you could turn $5,000 into $1 million. http://www.isecureonline.com/Reports/OHL/EOHLGA12 ---------------------------- 
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