High Oil Not The Problem
June 14th, 2006 by BWV
Back in the saddle..
While marketing will be an important part of my business going forward, I’ve got a few client accounts set up, I’m excited to be manning the trading turret once again.
During the multi-year advance in Crude Oil, countless newspaper headlines have credited advancing oil prices for causing even the slightest weakness in this 3 year old Bull market in stocks.
But overlaying Oil onto a chart of this Bull’s leader — the Russell 2000 small cap index — shows that the advances in each market have been noticeably correlated. Now both are weakening significantly.. each down roughly 10% 2006 highs. So much for conventional wisdom and the assumption that lower Oil is good for equities.
I personally believe any market strength or weakness is rarely due to the standard explanation. Usually it’s something that we only learn about later.
On that note, I’ll chime in later this week with thoughts on the very recent (negative) fixation with the inflation/rates/Fed triad.
