‘The End Of Cheap Oil’ — What This Headline May Really Mean
Sitting by the pool at the Mirage hotel in Vegas.
What did Dudley Moore say in the movie “Arthur?” DOESN’T SUCK!
Those of you who emailed me wishing me luck in the
poker tourney…well, it looks like family commitments will take me out of the
tourney. Family always comes first. If that changes, I will let you know. The
good news is the fact I will be saving $10,000.Â
I did need to write about yesterday.
Wow…wow…wow…wow!
I told you we were going to get a bounce, but also
told you I had no clue how long it would last. This is what I said: “Â I have
no clue how far this bounce takes us, whether it craps out today, how long it
lasts or whether “THE LOW” has been put in. My headlights do not go that far.”
Well, the market answered very quickly.
Let’s define Wednesday’s action:
^next^
I have always told you it was easiest to
measure a market by how it bounces after a drop. The latest test has
already failed.
For those unsure of what a negative reversal
means, time for a bit of education.
On Wednesday, the market opened with a big
burst. In fact, it moved higher in the morning on all major indices. At
about 2 PM, the market hit a wall. The move could not hold and in
fact, the market finished at its worst numbers of the day. The DOW and
S&P 500 actually finished down. This tells you one thing. The market had
every chance to stay up…and couldn’t. If you are a bull, it is not a
good outcome.  The action calls into question how much, if any upside
there may be from here. I find it amazing that after less than 2 days,
sellers got the upper hand. Just to make matters worse, volume was
heavy…meaning it sucked in all the buyers it wanted to before turning
back down.
I do want to mention a couple of potential
positives…but for this second, only potential.
OIL stocks continue to look lower. I called
for the top a couple of weeks back and watched the OIH drop 9% in days.
Many have asked how this is happening while OIL PRICES keep going higher.
Simple…I think there is a chance OIL PRICES will peak soon. Think about
it. What’s in the headlines every minute of every day? HIGH OIL PRICES. In
fact, the talk is deafening. Also, National Geographic’s cover is entitled
“The End of Cheap Oil.” This is classic late-stage activity. I do believe
higher OIL PRICES has been one of the culprits for a poor market…so
maybe lower prices would help.
Also, I still believe BONDS are possibly in a
position to not necessarily rally, but to at least halt the ugly dance it
has been doing. This could give relief to the many INTEREST-RATEÂ SENSITIVE
areas that have been blasted. Â
No matter what…and for the umpteenth time,
this tape will remain one of the most challenging tapes in quite a long
time. Treat it with the utmost respect. I am now heading back to bask in
the sun. I recommend it highly.
Gary Kaltbaum