This column was originally published on RealMoney on Nov. 2 at 1:41 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.
There's a happy energy medium out there, probably somewhere in the low $50s, where we can buy a lot of the crushed industrials but don't need to jettison the oils in one fell swoop.
That's what feels like might be behind this rally. In other words, the fundamental factor of this rally is not the good earnings from
, although it doesn't hurt. What's behind it is a sense that oil could be coming down, that natural gas might not be out of control, and that we might dodge the big energy bullet this year.
Of course, the conventional press will attribute it to whatever goes through the silly heads of editors: "Markets rally on media lift," or "Marts advance on better earnings" -- the latter is one of my faves. But I think the oil futures are coming down, and that's going to spur a lot of buying from retail to industrial. (It doesn't hurt that the weather is cold enough to spur buying but not so cold as to send the thermostat pumping.)
Now, understand, I like the oils, and particularly the drillers, but I think they will underperform the rest of the market for the rest of the year. Do you need to sell them? This could be one of those markets where you actually need to
them as they come in, because oil doesn't go through $50 in my playbook.
But I think that the market's speaking now, in this very unconventional rally that nobody's talking about, and what it is whispering is that oil's not the big problem going forward that it was just a short time ago.
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