The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Oil problems
Crude prices began climbing last night and continued throughout our premarket and regular trading session. At some point along the way, bonds and stocks succumbed to the pressure and sold off. Equity dip-buyers made their moving around 10:30 AM this morning and almost returned the S&P to flat but after lunch the index fell back again and treaded water around down 35 points. Yields finished the day up 4-5 bips across the curve.
The speculation in the press is that the US and Israel will launch significant attacks on Iran after the midterm elections, as a response to the increased attacks on ships in the Strait of Hormuz.
If this is true, it seems unlikely for crude to drop much in the next week and a half. That’s a long time for the markets to face this material pressure. If dip-buyers wait for the elections, we may see significant declines next week. Of course, we have no idea whether the supposed attacks will improve the situation once they occur. Should they accomplish something positive, the market will rocket upward like so many post-dip rallies before. And the dip-buyers will tell us all “I told you so” again.
What if the attacks do not accomplish something positive? I worry about that. Calling back to yesterday’s Recap. There are many big picture issues to weight with respect to this market. It doesn’t seem like fair winds are blowing for them.
For crude, at least, things look stormy until sometime after November 3rd.
See you Monday, have a great weekend.
-Mike
Visdom Market Commentary
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