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Seasonality of the OSX - Oil Services

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Oil that is, black gold, Texas tea

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With the attention on oil and oil related equities, we thought it made sense to review our seasonality work on the PHLX Oil Services Index (OSX).

The concept of our seasonality work is to track the price action over a 15 year period from 1990 forward. For stocks or indices with less data, we track the first full year of price data forward. Therefore, the OSX we track from 1998 to present.
Erlanger OSX Index Seasonality

Our first data point is the Cycle R which is Pearson's R. This statistical expression tracks the linear relationship between two variables. It ranges from +1 to -1, with a reading of +1 being a perfect match between the two variables while 0 would be no correlation and -1 a perfect inverse relationship. In the case of the OSX, the two variables are the seasonal cycles of 1999-2001 and 2002-2004 with the Cycle R equaling 0.56. This value means there is a seasonal tendency between the two periods.

Second, we then see how the OSX is trading in 2005 against the entire period of 1999-2004. The relationship between 2005 and the entire seasonal pattern again is compared again using Pearson's R and this number, 2005r equals .15. Again, there is a correlation albeit not really strong eight months into 2005.

Last, we have optimized the OSX to get the best statistical relationship. The yellow sections are the statistically strongest periods and the brown are the weakest periods. A minimum of 14 days of over or under performance is required for the yellow or brown shading to appear on the chart. The end result is we are finishing a strong period for the OSX and about to enter a period of weakness until late September (not advice).

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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