Oil Production - The Start of a New Analysis

According to the New York Times, here are the top oil producers based on barrels per day:

Saudi Arabia - 10.7 million barrels
Russia - 9.7 million barrels
United States - 8.4 million barrels
Iran - 4.1 million barrels
China - 3.9 million barrels
Mexico - 3.7 million barrels
Canada - 3.3 million barrels
United Arab Emirates - 2.9 million barrels
Venezuela - 2.8 million barrels
Norway - 2.8 million barrels

Tomorrow, we'll look at oil consumption. (It's that supply-demand thing again...)

Arrogance? Hubris? Insanity? ... or Just Plain Stupid?

Sometimes you have to laugh. Either the CEOs are just plain arrogant or they have determined the average walking-around Joe is just plain stupid.

Morgan Stanley reported a stunning fourth-quarter loss fueled by $9.4 billion of losses in subprime mortgages and other assets. The CEO John Mack did not step down, but said he would just skip his yearly bonus. Wow. Is that generous, or what?! Arrogance? Perhaps.

I guess he will have to live off his $37M he made last year. Plus, he had to sell 10% of the company to the Chinese to shore up the capital, and they're paying almost 10% interest on that!

So, what was his answer to all of this? "The results we announced today are embarassing for me." This was Mack's response to a conference all of the investment bank's first quarterly loss in its 72-year history.

So, what are the shareholders going to do about all this? Nothing. Not a thing.

No Time to Get Emotional!

It's time to become conservative. We need to raise cash levels. We need to raise stops. We need to pull back. We need to buy strong RS stocks. We need to buy 1/2 positions. We need to buy ETF instead of stocks.

We need to put emotions aside and look at the supply-demand charts.

Most importantly, if a stock hits a stop loss and there is a loss -- take it. A small loss is much easier to make up than a large loss.

Going Green - Capital Conservation

What do all the present indicators in the Market tell us? They tell us the Market is at its highest risk level. It means instead of being in the wealth-grow mode, you are moving into the wealth-conservation mode.

It is time to conserve capital because it is very easy to lose at this point. It doesn't tell us how deep or how long a correction the Market will require. Nobody can predict that. The charts and supply-demand lines will tell you when it's over, but it cannot predict that ahead of time.

So, we don't know how long the correction will be or deep it will be? What do we need to do?

Go green! Conserve capital!

What else? Stay tuned...

Summarizing the Signs

To summarize, there are some very strong signs that there may be a recession on the horizon. The bond market traditionally sees that ahead of time, although not always. The stock market will react to it ahead of time, most of the time.

Tread carefully in both the bond and stock markets.

Tomorrow we get back to technicals. Things are changing and so must the approach to investing...