June 6, 2008
For most of you out there, today was a terrifying day and rightly so with oil spiking higher than we’ve ever seen, and unemployment data that showed even more people without jobs. While we have managed to stay clear of a recession at this point, we will nonetheless get there if matters don’t improve. In reality, while the jobs data was no good, the market’s biggest impact was oil. Had oil traded flat today, we probably would have been hard pressed to see even a 1% decline. But when you have the biggest one-day move ever in the commodity, the impact will be detrimental to the stock market. The indices are now under a lot of pressure; the NASDAQ, which has been solid to this point, actually, in one day, broke the long-term trend line, while the S&P broke major support and put in a new ‘lower-low’ on the charts. And still, the market is far from being oversold; so more of the same could be in order next week, if oil continues to climb.
As talked about in previous posts, oil has become parabolic in its climb in price. The sell off that we saw over the past couple of weeks was clearly profit taking, and has shown that it is clearly not ready to throw in the towel. Instead it reached new highs today, much of which can be contributed to the report by Morgan Stanley stating that oil would reach $150 a barrel by July 4. So you can throw that firm in the pile with Goldman Sachs as companies who don’t seem to worry about the hysteria that they are creating by making such unnecessary predictions and the impact it has on people’s wallets.
While we are at it, what we are also benefitting from is the years of appeasement to the environmentalist-extremists who have fought to keep oil exploration in the United States at a minimum, so that we could remain dependant for our supplies on terrorist abetting countries. Folks, we need to start drilling, and we need to be energy self-sufficient .
Here’s the NASDAQ and S&P Charts…