Temptation …
The word itself has a seductive quality, much like the market. Yup, I said it – the market has a seductive quality. For example, after a horrible week last week, the market comes back this week singing siren songs of breaking resistance. Yet, giving in to the seduction of a good week might just land you on the rocks, much like the fabled seduced sailors in ancient times.
The market might also be seducing you to believe oil will come back to its former glory. Perhaps the speculators listening to the siren song of last week (that oil had bottomed and would now find its way back) drove the price up a bit, making the shorts cover. Be wary speculators, the rocks await.
- Oil prices fell on Wednesday after a new build in U.S. crude stock levels put a global glut back in focus, cutting short a rally that pushed up prices by about 19 percent over the past four sessions.
See what I mean about the siren song of oil returning to glory? Nineteen percent in a week is a lot of retracing, but, then again, it had room for such a big move. Then again, what exactly was the reason for the climb? Oh yeh, the shorts covered on a strong bid.
Well, the song is beautiful and alluring, but the reality is oil is still fundamentally challenged.
- U.S. Oil inventories saw a build of 6.3 million barrels in the past week, sending prices lower to a five percent drop in today’s trading.
A 5% drop to the speculators who bought on the quick rise is like crashing into the rocks. So, my advice to those who care is strap yourself to the mast. That way, you can hear the beautiful siren song of the market (or oil), but you are not compelled to sail your ship onto the rocks. For now, just keep watching the market. It will settle down.
- German Chancellor Angela Merkel indicated that a diplomatic offensive by newly elected Greek Prime Minister Alexis Tsipras to ease his nation’s bailout-aid requirements is failing to win over converts.
As I have mentioned, part of the turmoil in the market is the troupe of Greeks flitting about Europe trying to sell their stellar idea that somehow those who lent the money to save Greece would now find it in their hearts to write off some of that debt. Well, that ain’t happening, and it is now becoming clear the newly elected populists in Greece won’t be able to deliver on their most bellicose promises, such as ending austerity, but they will get a helping hand in some way, shape, or form, and this will end the provocative talk about Greece leaving the Eurozone.
As to the market, one should consider when evaluating it that as unstable as it seems, the barometer that measures the instability is currently sitting at 17.5, more or less. That would be the VIX. On January 19th, the volatility gauge hit 22 and change, and since then, it has steadily gone lower. Right now a 17-plus handle nicely fits the market.
In the meantime, while waiting for the market to settle down, start checking out investments or trades in technology. There are a lot of great stories out there, but there are also on-the-cusp technologies that are ready, or just about ready, for prime time.
- A new kind of lithium-ion battery could let portable electronics such as smartphones and smart watches last twice as long between charges. The battery was developed by SolidEnergy, a company spun out of MIT in 2012.
The world is changing fast, so don’t get caught up with the current turmoil. Sail past the rocks, leave the siren songs behind, and look to the future, which, by the way, is now.
Trade in the day; invest in your life …
