A Rebound in Energy

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Elliott Gue, The Energy Strategist: I would liken the energy sector at this time to a coiled spring; bullish fundamentals are being totally overshadowed by general market and credit fears. "When those fears are allayed, even partly and temporarily, the snap-back rally in the group will be tremendous. I expect we'll have just such a snap-back rally in the fourth quarter of 2008.

"In recoveries from panic selloffs in the past, the energy patch has tended to outperform the S&P 500," notes energy sector specialist Elliott Gue.

In his The Energy Strategist, the advisor offers his outlook for the sector as well as a package of five favorite energy-related stocks, including ideas in the drilling, infrastructure. oil services and exploration areas.

"This has undoubtedly been the most challenging and unsettled market in recent history for the stock, bond, currency and credit markets. Not surprisingly, the energy sector hasn't been immune to the selling pressure.

"However, I would note that the selloff in most energy stocks I cover has little or nothing to do with fundamentals and everything to do with market sentiment and a pervasive sense of panic.

"Institutions are dumping stocks to raise cash and the primary fear infecting the energy markets is that a dramatic global economic slowdown coupled with a seizing up of credit markets will destroy demand for energy commodities.

"The good news: Panicky markets typically offer investors the best opportunities. Although timing the exact bottom is next to impossible, I would liken the energy sector at this time to a coiled spring; bullish fundamentals are being totally overshadowed by general market and credit fears.

"When those fears are allayed, even partly and temporarily, the snap-back rally in the group will be tremendous. I expect we'll have just such a snap-back rally in the fourth quarter of 2008...

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