Leaning on crude, Dow up 20 points.

Discussion in 'Energy Futures' started by areyoukidding?, Oct 6, 2005.

  1. They are performing those cardiac electro shocks to the patient. Barely resuscitating.
     
  2. Flooding the market with cheap oil, come on!!

    Remember it used to be cheap money in 2002?
     
  3. I don't see much movement potiential today.

    The market is waiting on Friday's employment report.

    Support and resistance scalping plays are probably today's best approach.
     
  4. clear!! it worked always does...
     
  5. Pabst

    Pabst

    Oil prices have had ZERO effect on equity prices during this whole macro cycle. American's seem to think we're the ONLY country paying more today for energy than a year ago. Japan, who imports 100% of their oil saw the Nikkei make multi year highs as oil reached its peak.

    In fact: lower oil prices may wind up being a bear item for stocks.

    Why?

    The flattening of the Treasury yield curve has many participants worried that deflation is the real culprit looming in the background, not inflation.

    Despite a three year recovery accompanied by low interest rates, booming asset values, and increased employment, gains in wages have been minimal. Coupled with the new bankruptcy law that will compel lenders to increase minimum credit card payments, the chances of a slowdown in consumer spending are high. Thus the market was on balance pleased to see global industrial production so robust that it was supporting high oil prices. Except in the VERY micro ST scalp type time frame, I'd IGNORE oil when trading equities.
     
  6. Pabst, this is without a doubt one of your BEST POSTS ever.

    Unfortunately, not many people here on ET will be able to grasp the concept of SECULAR DEFLATION. Instead, they think that there is a direct inverse relationship between the oil and equity markets.
    As you indicated, the flat-yield curve tells quite another story.

    Once againk, you hit the nail on the head!
    Great Post.
     
  7. we can grasp it. it seems to be predicated on the fact that oil and the stock market went down together in the same week. we will see if you make up another theory if they decouple or work inversely again.
     
  8. taodr

    taodr


    Excellent post.
     
  9. Why am I not surprised that you would trash a very insightful comment by one of the few people on this site that has actually traded for more than two decades, and has done so at the CBOT.

    Pabst is one of the few seasoned veteran traders that contributes value to ET, a website that has seen a tremendous deterioration in quality posts over the last year because of idiotic little kids that have nothing better to do but play on the Internet starting threads with posts like:

    "A LONG time coming. Tough day for the bulls. we shall see."

    "This is fantastic. It will never go down!"

    "Back in Black . . . finally!"


    I guess you also conveniently loss site of the fact that crude rallied from $42.00 at the beginning of 2005 to over $70.00 per barrel and the SPX rallied from 1180 to 1245 during the exact same time period.

    So much for your rather naive theory about oil prices having a negative correlation with the equity markets.
     
  10. Pabst

    Pabst

    Well try this moron. In spring of 2003 the S&P was trading at 800 and oil was $25 a barrel. During the 2000-2002 equity break oil went down hard from $38 to the teens. So tell me big-shot where the negative correlation has been during the MACRO cycle.
     
    #10     Oct 6, 2005