Oil stocks will under perform crude oil and the oil etf for the next several years - but Energy Juniors will outperform both.

The market is now setting up for a great entry point into junior oil Stocks!

What we have here is an EXPLOSIVELY BULLISH ratio of West Texas Crude versus Major Oil stocks.
In technical parlance, this chart has recently broken out of a multi-year reverse Head and Shoulders pattern (or Cup & Saucer depending on your interpretation) painting a target of 0.14 at the least.

What is imminently clear is that when Oil Stocks have underperformed against Crude Oil, the general direction of the stock market has been lower!

This in and of itself is no secret as we have all been frustrated by the lack of progress in oil stocks versus the underlying commodities. But what is perhaps foreboding is that the relative underperformance is fated to go on for much longer – probably years. And by inference the Dow will remain in an extended Secular Bear Market. Confirming what we have been saying that returns on equities would be low if not negative for the next 5-10 years!

The highlight:

Now that we’ve painted the doom and gloom, there is some light at the end of the tunnel.

Oil stocks will outperform Crude Oil -- the Dow will also rebound. We are now approaching an excellent entry point into Oil equities.

Please note we do not think that Oil Stocks will show negative performance over the next 5-10 years but we do think they will lag Crude Oil itself. Superior returns can be captured through smaller energy explorers and producers that will benefit from market trends as well as company specific news such as promising drill results. Oil stocks are the place to get set and the time is now!