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Energy Update

05/04/2012

Back in my February 1, 2012 blog, I downgraded energy from overweight back to market weight.
 
Since February 1:
 
•   The S&P 500 Index (SPX) has appreciated from 1312 to 1375, or 4.8% (Figure 1.1)
•   The spot price of oil is unchanged at $99.50 (Figure 1.2)
•   The oil services ETF (OIH) has declined from $41.77 to $39.25, or (6%) (Figure 1.3)
•   The SPDR-Energy Select ETF (XLE) has declined from $71.33 to $68.75, or (3.6%) (Figure 1.4)
 
Within that blog, I stated:
“Currently, I expect it is time to move energy back to market weight once again. I am rather confident that the next move in 2012 will be to raise it back to overweight”
 
Over the past week I have received several requests to provide an update to my energy expectations. Currently, I still anticipate that my next move will be an upgrade to overweight. However, I am not ready to raise that expectation and stand pat that energy holdings should remain market weight at best.
 
Figure 1.1 SPX, February 1, 2012 to May 5, 2012

Source: Bloomberg
 
Figure 1.2 Spot Oil Price, February 1, 2012 to May 5, 2012

Source: Bloomberg
 
Figure 1.3 OIH, February 1, 2012 to May 5, 2012

Source: Bloomberg
 
Figure 1.4 XLE, February 1, 2012 to May 5, 2012

Source: Bloomberg

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