Is a 'dead cat' bounce due or a bottom reached for O&G and energy stocks in KL?  

The gloabl sell offs in energy and O&G related stocks on the back of a confluence of negative headwinds - higher oil supplies, deteriorating in the supply/demand dynamics, the rally in the US$ - have hammered oil bulls badly. A lot of stocks in the US are now trading significantly lower compared to the summer months peaks. There is a blood bath out there. 

Prices of ETFs like OIL, UCO, DBO or XOP have all dropped significantly. Prices of smaller producers on the other hand have seen their share prices collpased as the economics of oil at these levels mean a shake out is underway. Investors sentiment obviously is lousy at this stage

But is the indiscriminate sell down justified? How is it possible that crude oil trades at $80 today when just a couple of years ago, the world was bracing for peak oil - $300..remember? Who could have predicted that we now have a supply glut? Now in the last few days, OPEC says that the slump in oil price is the work of speculators. UBS coughs up for manipulation of gold and silver!!! Shale gas - even this magic of massive amounts of barrels equivalent is looking a little questionable. Hmmmm..... how surreal.... is nothing off limits?  

What about the ripple effects in the local market? How should one react.

The sell off in names like SKPetro, Armada, etc - down 25%? - due to this oil and energy re-think is interesting because it is based on a very simplistic premise of oil in the near future. I can't say I know what the future economics of supply and demand will be like as I am no expert. All I know is I am reading conflicting news flow - enough to tell me that a 25% sell off when the jury is still out on an energy situation is a interesting buy in situation. I mea, if OPEC says oil speculators are behind the recent slump in price per barrel, it is good enough for me, at least personally, to be convinced that I cannot ignore the odds

Right now what I can see is - and I am pretty sure there a lot of you guys out there who have too - the sell off is eerily reminiscent of past episodes of sell offs or dumping by funds. Usually starts off with some exogenous events - expected or not - economic or geo-political - elsewhere, when it hits, fear hits the ceiling and reaction then gets amplified and exaggerated. Price reaction then gets blown out of proportion and the rest as they often say is history. A melt down or massive sell off. But the common denominator is institutional funds are inevitably involved.

In my own cynical view, I think this is again a time to think and do the exact opposite.