Yesterday...I didn't think the stock market believed that $55 oil could stick based on a subdued reaction from oil stocks and that reducing exposure into the strength for short term people may make sense. If the question...is about a bubble I would say no. I am aware of two bubbles since the SPX came to be in 1957. There was an energy bubble in the early 1980's and the tech bubble in 2000. In both instances those sectors grew to be about 30% of the index. Energy, today, has grown from 7% to 8.6% of the index. The stocks could correct but the run up has not been enough to cause an implosion.
And Barry Ritholtz is also not quite convinced.
Is energy becoming a crowded trade? When does the crowd turn into a mob? As in, when does this newfound appreciation of oil prices become a contrary signal? Jim Cramer mentioned yesterday he was a seller of oil stocks, but IMHO he's merely making a gut feel trade (also known as a guess). I need a more concrete sell signal before blowing out.
Seem reasonable to me. Oil itself may be a bubble, but the valuation for oil stocks don't seem particularly out of line with the rest of the market.