We are reiterating our call for lower oil prices from now through the November elections. We have reasons other than political for this call, but it seems as if a substantial risk premium has been built into oil prices due to hurricane season.

There are a few months left in hurricane season, so if a hurricane does enter the gulf, you may see a few sharp rallies along the way. This aside, we still believe that energy prices in the intermediate term are headed lower.

Here are some comments we have made on the issue;

August 11, 2006; "A Sharp Fall For Energy Ahead ?"

August 14, 2006: "We Need to Pay Closer Attention"

Energy stocks remain on the top spot for relative strength, but as oil prices have been making new highs, energy stocks have struggled to reach to peaks we saw in April.

onomy continues to slow, we may see the pressures from high energy prices ease. As prices begin to contract, energy will lose its top stop in the relative strength rankings. On significant drops in energy, we plan to increase our exposure to the sector. While the longer term outlook for energy is still positive, the sector looks much overbought at current levels.