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This was a very disappointing morning for stock bulls.
1) There was an active attempt to short energy stocks going into the weekly oil inventory numbers at 10:30 ET; volume on the XLE (the S&P Energy Sector ETF) was particularly strong; however, rather than seeing an increase in inventory levels, there was a drawdown, and the shorts in energy stocks were forced to cover quickly, driving energy stocks back to new highs.
This has played right into the hands of energy stock bulls, who have argued for days that energy stock prices are unlikely to show appreciable declines in the near term. Their arguments:
--Forget charts
--Prices are up, but energy stocks are not overvalued
--There is earnings visibility WAY OUT.
Apropos of today's trading, Brazilian oil company Petrobras has now passed our parent General Electric [GE
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] as the fifth largest company in the world by market capitalization ($325 b vs. $316 b, according to MSN Money).
2) The last few days have seen a deterioration in several closely watched groups, including home builders, banks and brokers.
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