siding calculator replace siding siding calculator lakemoor painting aluminum siding siding replacement beach park .. Chicago Drug testing

Stocks & Oil, Sat Jun 18th, 2005

Both the stock market and oil prices rallied recently, which seems to be a paradox, because high oil prices are negative for earnings (i.e. a higher production cost and a higher consumer tax). However, the stock market was worried about another "soft patch," of slower economic growth, and the sharp rise in oil prices suggest the U.S. economy is still expanding at above trend growth.

The two charts below are same period daily charts of SPX and OIH. The short-term technical indicators suggest SPX is near a top, e.g. VIX closing at a multi-year low, VXN closing at an all-time low, and the NYSE Oscillator's 20 day MA at an extreme level. Also, Nasdaq closed at 2,090 Fri, and 2,100 is major resistance. SPX rallied to 1,219.5 Fri, and 1,220 may be resistance. SPX may be creating a bearish head & shoulders pattern, with the left shoulder at 1,217.9, the head at 1,229.1, and the right shoulder at 1,220 (see chart). SPX may pullback, consolidate, and become more volatile next week. Major support is about 1,200, the current 20 day MA, which SPX held over the rally, and 1,200, in general, which is psychological support and a congestion area. Major resistance is at 1,220 and 1,229 (the recent high).

OIH closed at an all-time high and created a bearish hammer Fri. Major resistance is Fri's high at 104. Major support is at 100.30 (previous highs), and the 10 day MA, currently at 99 1/4. There's also an open gap at just below 95 1/2, and Jul Max Pain is still 95. OIH rose about 20 points, while oil rose from $47 to about $59 a barrel. Consequently, if oil falls to the low $50s, then OIH may retrace 50% of the 20 point rise. The steep rise (also, see MACD) suggests a consolidation period soon. Both the RSI and Oscillator (ULT) are severely overbought, particularly for an index.

Perhaps, the oil market has discounted future events that would influence oil prices, e.g. stonger than expected global growth, the start of hurricane season Jun 1st, which may affect oil platforms and refineries in the Gulf, end-of-the-quarter window dressing, and the 4th of July holiday, which is the start of the summer driving season. Also, I may add, the U.S. oil strategic reserve is filled up. So, the federal government isn't draining oil from the market. Moreover, China's economy is "overheating," and it's to China's benefit to grow at a sustainable rate, to prevent inefficiencies.

Next week is a light economic and earnings data week. So, oil prices may have a more influencial effect on stock prices. Consequently, SPX puts, for example, may hedge OIH puts. Both SPX and OIH are at high levels. Economic reports next week are: Mon: Leading Economic Indicators, Thu: Unemployment Claims and Existing Home Sales, and Fri: Durable Goods Orders and New Home Sales. Also, the U.S. weekly oil inventory data Wed should move oil prices. I believe, the positive correlation in stocks and oil will decouple next week, because the longer oil prices stay high, the more negative it will affect earnings of non-energy stocks. Arthur Eckart, PeakTrader.com

See PeakTrader.com Market Overview section in Forum Index for charts.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time. This methodology has resulted in excellent returns with low risk over the past three years.

In The News:

Trading Tips No 8: Picking the Best Stock Market Price

Carefully thinking through your goal as a trader is of... Read More

Stock Valuation using the SMP Model

Disclaimer: Please note that I do not necessarily purchase, own,... Read More

So, What is This Stock Market Thing Anyway?

We've all heard of the stock market and probably have... Read More

Trading For A Living - Part 1

There can't be many traders who haven't at least considered... Read More

365/7/24

What does it take to be a stock trader? It... Read More

A Penny for Your Stocks

According to Investopedia Inc. the penny stock market has seen... Read More

Trading Tips No 2: The Big Lie in the Stock Market

It is commonly reported that the stock market averages about... Read More

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More

Mid-Cap Stocks: Asset Class with an Identity Crisis

Much like the middle child, mid-cap stocks have long struggled... Read More

Buy and Hold: How to Perpetuate Your Investment Losses

A recent cartoon in my daily newspaper showed two guys... Read More

Bargain Basement - Finding Stocks That Go Up

Have you been listening to the talking heads on CNBC-TV?... Read More

Roller Coaster

I love roller coasters. The steeper the better. High and... Read More

12 Basic Stock Investing Rules Every Successful Investor Should Follow

There are many important things you need to know to... Read More

Stock Chart Reading

As an investor you will want to check out any... Read More

Dont Buy Stocks based on P/E Ratio alone

I use the P/E ratio as a secondary indicator for... Read More

Structured Settlement; Lawyers in NY and Mutual Funds

Minority Report the movie may not be far off if... Read More

Market Success

Who are the successful investors?There are those who follow the... Read More

Stock Market System ... ONLINE STOCK TRADING ... Beyond Day Trading Basics & Tips

Day trading is all about making buy and sell decisions.... Read More

High Price/Earnings Ratios and the Stock Market: a Personal Odyssey

After some forty years of banking and investments, I retired... Read More

Defining a Long-Term Investment in the Stock Market

For some "long term" would mean holding a stock position... Read More

Lifestyle Funds Provide Greater Security?

With the stock market stubbornly refusing to settle down and... Read More

Inverted Interest Rates

Inverted interest rates? What's that? Who cares? Even if you... Read More

Can?t Stand The Heat

It seems that every day I turn on the TV... Read More

Tips to Finding Other People?s Simple Trading Plans

Did you know you can make money (and a lot... Read More

Buy and Hold Investment Philosophy

Wall Street has been preaching the doctrine of Buy and... Read More

led light manufacturers in usa led lighting savings Pete's produce ..
led light manufacturers in usa led lighting savings Pete's produce ..