by Stan Heller, Consultant, VectorVest Canada

Oil Price FallingWell, another gloomy day in the Canadian market as a further slide in oil prices pressured the energy sector.

Crude oil continued to head lower after OPEC said that it expects demand for oil to fall in 2015 from current levels. Oversupply fears were also stoked by a report that U.S. oil inventories were higher than expected. With several popular petroleum stocks having lost half their value, it might be useful to revisit our founder’s essay from Friday, Dec. 5. Before commenting specifically on oil, he also commented, “The time for caution and protecting profits has arrived.”

Dr. DiLiddo’s Essay Friday, Dec 5:
“Just take a look at a Business Sector Graph of the Petroleum Sector. The average price of the Industries in this important sector peaked on July 1, 2014 at $32.89 per share. It closed at $23.29 per share today. This sector had an RT ranking of 4 on July 1, 2014. It hit a low of 41 on November 25, 2014 and remains there today. (Canada: 22nd on July 2 and dead last at 40th today) I hear a lot of talk about buying petroleum stocks at current bargain prices, but I wouldn’t touch them until the Business Sector RT Ranking starts moving higher. Just be patient, Graphs Don’t Lie.”

So, with the MTI (Market Timing Indicator) in Canada falling below 0.60, it means we are at a level that historically signals the market is nearing a bottom. It can go lower and stay at this level for awhile, but historically when the MTI finally does start to rise from these low levels, it’s one of the safest times to buy for growth over the long term. (see chart below). For when to buy again, look for the guidance to prudent investors in the nightly Views tab and on the home page. Generally we’ll want to see at least a Primary Wave Up, and more conservative investors will wait for at least a green light in the Color Guard price column. Please keep in mind that we do not offer specific investment advice. Each individual investor is responsible for their own research and investments according to their own risk tolerance and investment goals.

For a full December 10 Colour Guard Report, please click on the link below to listen to the video:

Your comments about the Wednesday Canada Colour Guard Report and ideas for improvements if we decide to continue with it on a weekly basis will be greatly appreciated.

Emotional Cycle and MTI Comparison