Just shootin' the breeze here.... Starting with OPEC pumping less oil, I'm thinking we might get a bounce in commodities in general here and corresponding pressure on stocks. Stocks are up almost 9% off the June lows with only one test of the low while commodities in general have taken a pounding and the mood for stocks is...what...ebullient? Fat and happy? It seems like one bad news item could push things back off the high for a bit.
You are looking at the market in an election year. Between now and election day you will hear plenty of remarks from the Whitehouse's Republican Fat Cats like Fisher's today, to wit, and i paraphrase: "Well if you exclude automobile manufacturing and housing from the picture, the economy is doing remarkably well." And with that nonsense remark, and a little help from crude and a couple of preceeding down days, the market pops up. Now if you're thinking at all, you realize what an ominous situation we are in. Housing is now nearly 25% of the economy and add in autos and you've suddenly got about 30% of the economy on the rocks. So, bottom line, just be patient. The longer these ding-a-lings are able to prop up the market with rhetoric, the longer they can forestall the inevitable. Possibly even until election day in November, but I doubt it. In the meantime, either daytrade, go to cash, or stay short and be patient. You will be richly rewarded. Whatever you do, do not go long on intermediate term positions in any major way.
I think we might see a bounce in commods simply cause they came off so fast. I don't think OPEC can do much about oil unless they cut back dramatically. If they are smart, they will ltry to have oil settle in the $50 range which discourages long term exploration, alternative energy testing, etc. Long term? Commods are toast in my opinion, as are stocks and home values. May take awhile, but its gonna get ugly.
What's the point of temporarily closing up the market for oil? Selling oil at 80 is better than selling oil at 50, that's all there is to it. They will run out of oil in the same time but in one case will earn $30 more, if competition doesn't eat your margins then you just go for the highest price! How are labor costs? They shouldn't rebel too much..
What? There is enough oil for at least 50 years. If it gets too expensive, the buyers find alternatives, and Saudi and crew go back to riding camels. This is how they think, in general (always a few small producers that want to max price). They want steady increase in CONSUMPTION, which comes with stable prices. Did they make money on the last spike? Absolutely. Are they paranoid about overly high prices, global recession, and a move to hydrogen/ethanol/electricity/ etc? Its all they think about.
Yeah I forgot about the long term substitution. But are alternatives eliminated completely if in the short term there's no incentives? The oil producers could still fall off the cliff.
Actually, it is estimated that Iran has enough oil in their fields to last around 400 years. Source: CNBC World