So, here we are on Monday and the market is showing nary a strong sign of going backwards. True, the VIX is up right now, but, it is retreating from its morning opening and it remains in the mid-14 zone.
- Unknown election outcome is stocks’ big fear
Maybe, as we get closer to the election, the above will have an effect, but, as I just wrote, the market seems fearless at the moment. By the end of this day, that might no longer be true, but at the moment, it seems this is the case.
- While the recent selloff may be in the rearview mirror, there’s a bigger one coming within the next three months, Empire Execution president Peter Costa told CNBC Friday.
With the market demonstrating some fearlessness, we have more of the same blah-blah-blah doom and gloom predictions from the sages on Wall St. As they say though, disagreement is what makes a market. Who is “they” by the way?
- This is a business where nobody has a crystal ball and the best we do is manage risk and uncertainty. There’s only one guy who got it right all the time over the past 20 years and his name is Bernie Madoff.
No matter, the fact of the matter is that it does take buyers and sellers to make a market and the fact that folks such as Peter Costa predict doom does matter, in that it creates a certain amount of tension in the market. After all, there are plenty of investors and traders that listen to these prognosticators.
So, here is what I know.
- U.S. Gasoline Average Price to Fall Below $3 First Time Since 2010
In fact, across the country, gasoline prices have fallen below $3, substantially in many places. This is about as good of news for the US consumer as one can find. As to a trade, shorting oil seems to be on the table, which will further exacerbate the depressed price of oil. After all, it was not too long ago that the price of oil relied more on the speculators than it did on supply and demand.
- It is always difficult to forecast where crude oil prices are heading for the next year or so. However, that said, the world of oil has changed and continues to evolve into one where the price is still being driven by supply.
See what I mean. The oil market is looking at the fundamentals, as is the overall market, and until that changes, the overall market will have an upside bias, even as it bobs up and down. Not so for the oil market.
- Going forward there are no signs that suggest the price of oil is likely to change course. Rather, expect more of what we have seen over the last several years with a slow growing bias to the downside.
Another commodity that speaks to this idea of the market having an upside bias based on the fundamentals is gold. It had a brief but small upturn during the recent downturn, but it was never enough to tell me the market was in real trouble. Today, it is below $1170 and it is showing no sign of changing course.
Now, gold does not have a direct effect on the US consumer, but it does signal the money flow is shifting into more of a risk-on mode and that is what we are seeing in the market – more risk-on. Granted, I think it is still too much too fast, but, hey, it is what it is.
What that means is we can expect some volatility and an occasional roll back in the market until it comes into balance. That place of balance will be determined when all the earnings are in and measured. Well, maybe not, but it should be that way, or so I say.
Trade in the day; invest in your life …
