Investing 101: Why Are Commodity Prices Falling?http://www.fool.com/investing/general/2012/05/15/investing-101-why-are-commodity-prices-falling.aspx Eben Esterhuizen, Kapitall
May 15, 2012
Commodities fell nearly to two-year lows last week, leading to some speculation that the massive commodity bull market that started in 1999 might be stumbling.
Why are commodity prices falling? There are three main reasons:
So which commodity stocks have been dragged down by the bearish sector trends? For ideas, we looked at the RSI(14) indicator and institutional transactions.
Because institutional investors handle such large amounts of money, it is easy enough to assume that the big money managers know more than the average investor. This is why these investors are also sometimes referred to as "smart money," and why their trades are so closely followed.
Business section: investing ideas
1. Cobalt International Energy (NYSE: CIE ) operates as an independent, oil-focused exploration and production company. Its market cap is $8.87 billion, with a most recent closing price of $23.29. Its RSI(14) indicator is 28.83. Net institutional purchases in the current quarter amount to 73.4 million shares, which represent about 49.65% of the company's float of 147.84 million shares.
2. MarkWest Energy Partners (NYSE: MWE ) gathers, processes, and transports natural gas. With a market cap of $5.63 billion, its shares most recently closed at $55.30. It has an RSI(14) indicator of 28.51. Net institutional purchases in the current quarter total 9.8 million shares, which represent about 11.15% of the company's float of 87.9 million shares.
3. Pengrowth Energy (NYSE: PGH ) engages in the acquisition, exploration, development, and production of oil and natural-gas reserves in the Western Canadian Sedimentary Basin. Its market cap is $2.97 billion, with shares most recently closing at $8.31. Its RSI(14) indicator it 28.18. Net institutional purchases in the current quarter come to 27.2 million shares, which represent about 7.57% of the company's float of 359.38 million shares.
4. Chesapeake Midstream Partners operates, develops, and acquires natural-gas gathering systems and other midstream energy assets in the U.S. It has a market cap of $3.48 billion, with shares most recently closing at $23.72. Its RSI(14) indicator is 29.59. Net institutional purchases in the current quarter total 6.3 million shares, which represent about 14% of the company's float of 45.01 million shares.
5. Hornbeck Offshore Services operates offshore supply vessels, multipurpose support vessels, and a shore base to provide logistics support and specialty services to the offshore oil and gas exploration and production industry, primarily in the U.S. and the Gulf of Mexico. Its market cap is $1.22 billion, and its most recent closing price was $36.03. It has an RSI(14) indicator of 26.97. Net institutional purchases in the current quarter amount to 9.2 million shares, which represent about 30.61% of the company's float of 30.06 million shares.
6. Gulfport Energy develops and produces oil and gas in the Louisiana Gulf Coast. It has a