Adam Sarhan CNBC Quote; Pros: Are Sharp Gains in Oil Here to Stay?

Published: Monday, 31 Jan 2011 | 6:30 PM ET:
Lee Brodie
Commodities ended the first month of the year up more than 2 percent with oil front and center after unrest in Egypt sent prices soaring.
London’s Brent crude settled above $101 with U.S. crude [CLC1  91.13    -1.06  (-1.15%)   ], the benchmark for world oil prices, racing to catch up.
“This was exactly the type of black swan event nobody was expecting this year — a political revolution in the Middle East — and it’s turned out to be a boon for oil,” says Adam Sarhan, founder of New York-based financial advisory Sarhan Capital in a Reuters interview.Are the sharp gains in oil here to say?

Instant Insights with the Fast Money traders

Joe Terranva thinks so. He tells the desk that historically the period  “between MLK Day and President’s Day is when oil prices typically bottom. If this is the weakest part of the year, we’re probably looking at seriously higher prices.”
Strategic investor Dennis Gartman, also thinks the path of least resistance in crude is higher. “Crude could go another $20 higher,” he speculates, “(especially) if we start to see unrest spread across the Arab world.”Guy Adami is a little more skeptical. Before the black swan event, “Oil looked like it put in a double top and was about to break down,” he says. “I think the onus is on the bulls to keep the surge going. If the turmoil dies down, I think crude slides.”
”Plus crude rallied in isolation,” says Steve Cortes. ‘Unless you think the Suez will be closed I think the rally is begging to be sold.” Cortes argues that heEEM [EEM  46.92    1.11  (+2.42%)   ] is flat to slightly lower over the last 3 months. “Can energy continue to march higher without demand from emerging markets. I say not.”
What do you think? We want to know!
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CNBC Fast Money Quote: Did Gold Bubble Just Pop?

The traders are closely watching the action in gold [GCC1 1368.9   -2.7999  (-0.2%)   ], which sold off sharply this week breaking below its December low of $1360 on Friday before recovering some of those losses.
As Guy Adami likes to say gold takes the stairs up and the elevator down and we’re certainly seeing those kinds of sharp moves lower right now.
The spot price of gold closed in negative territory on Friday for a fifth consecutive day, its longest losing streak in seven months. The precious metal is now down about 4% on the week.
“On the charts, gold has breached below two important support levels, namely its 50-day average at $1,382 and – as we mentioned above – its December lows at the $1,360s, explains Adam Sarhan, chief executive of New York-based Sarhan Capital in a Reuters interview.

“At this stage of the game, gold is at a very important inflection point,” Sarhan says.” How should you position. What should you expect?
For insights CNBC’s Fast Money turned to one of the most followed and esteemed commodity traders in the nation, Dennis Gartman, author of The Gartman Letter.
He tells us all the excitement about the declines is a lot of tempest in a pot of tea.
”Gold moved from $1430 to $1365 and everyone is screaming how serious the gold decline is. But if a stock went form $14.30 to $13.65 would they be as excited? No. But it’s the same percentage move.”
That’s not to say Gartman thinks declines are over. He doesn’t. “Can gold go down more? Can it go down to $1325. Certainly it can,” he says.
As you might remember on Monday’s Halftime report Gartman said the the downtrend in gold could last through much of January.
”It creates fear in the longs and joy in the people who are short,” and as a result it generates short-term momentum to the downside. “I wouldn’t be surprised (to see) the correction last 2 or 3 weeks.”
But at the end of the day what Gartman thinks matters most is that gold has been moving from the lower left to the upper right for over a decade.
”Do I think the bull market in gold has ended? Not really,” Gartman concludes.

A few oil service stocks ended the week as big winners after Goldman Sachs added Diamond Offshore [DO  70.57   3.28  (+4.87%)   ] to the ‘Conviction Buy List’ and after the firm upgraded Baker Hughes [BHI  56.60   1.77  (+3.23%)   ] to ‘Buy’.
What’s the trade?

If you believe oil prices will move from where they are to modestly higher through the end of the year then Oil Services is the place to be, counsels Joe Terranova.
It’s important to understand part of the Goldman upgrade was predicted on the thesis that the two stocks mentioned above had underperformed and they’re betting on a game of catch up, reminds Guy Adami., I don’t like to play stocks for that reason – usually there’s a reason they’ve underperformed.
In the space I like Rowan [RDC  33.22   0.36  (+1.1%)   ] and I also like DryShips[DRYS  5.40   -0.05  (-0.92%)   ], says Brian Kelly.
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