I am not sure how long the recovery will be either, however I know that Brent crude has registered the most oversold reading in decades, and the GSCI has registered the most oversold reading since 1970(that's as far back as my chart goes). I have not decided yet, but I like the indexes.
The Australian energy index is down around the GFC lows again circa 10500. What appeals to me about that is although I wont find the best performer in the sector, I don't have to do any stock picking.
There are some junior oil equity ETFs that are down 50%, but have to check what the liquidity is like, might be a little thin.
The others I have been eyeing are the junior gas index and the oil sands index, but I think there are more variables to the gas and sands energy plays, so will probably stick to oil stock etfs.
Will begin a nibble soon with 25% of allocated capital to trade. Will buy more if WTIC and BRENT trade in the low 50s.
The gold to oil ratio is moving to a point where a short gold long oil trade may be worth a look at.
1 ounce of USD gold purchases 19.5 barrels of oil.
Considering how oversold all commodities are, I might just take the long side of the oil trade, unless gold collapses below 1135.
If oil stabilises long term around 50, that will put lots of downside pressure on gold, but I think we are close to a long term bottom in commodities.
I am working off long term charts so this analysis is not relevant to short term traders.
