Home
>
Stocks & Mutual Fund
>
Stocks & Oil, Sat Jun 18th, 2005

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.

Airbnb cleaning service Arlington Heights ..

In The News:

Inversion Space unveils Arc, a reusable reentry vehicle that can deliver up to 500 pounds of cargo from orbit to anywhere on Earth in under an hour.

Red flags like processing fees, urgent countdowns and requests for full Social Security numbers expose fraudulent settlement sites targeting consumers.

Comprehensive analysis of Google Maps, Waze and Apple Maps examines usability, routing accuracy, data handling and features across the top navigation platforms.

Expert analysis reveals whether wired Ethernet or wireless Wi-Fi connections are safer for home internet use, plus practical steps to secure your network from attackers.

Australian construction robot Charlotte uses sand, crushed brick and recycled glass to 3D print fireproof, floodproof homes with reduced carbon footprint.

Cybercriminals are using fake invitation emails to trick recipients into downloading malware and stealing personal information and data.

Flying drones could help retailers fight a 93% increase in theft rates as Flock Safety promotes airborne security systems to track suspects and deter crime.

The Fox News Artificial Intelligence Newsletter brings you the latest news on the emerging technology every Saturday, highlighting top stories.

Hacker group Radiant stole data from 8,000 children at Kido nursery chain, demanding ransom and directly contacting parents with intimidation tactics.

As 18 states implement bell-to-bell cell phone bans, creative students use Google Docs, iMessage on MacBooks and Post-It notes to stay connected in class.

A sheriff's captain says deputies often spend hours writing reports between calls, but Axon's AI program, Draft One, helps them save crucial time in the field.

Sora 2, OpenAI's new video-generation app, can create AI-generated videos based on a singular prompt. The results are both mind-blowing and terrifying.

iPhone and Android users can reduce Wi-Fi calling battery drainage through settings adjustments, background app limits and stronger Wi-Fi connections.

Work email scams are becoming harder to detect as criminals use AI and spoofed addresses to trick employees into opening malicious attachments and links.

From her Arizona living room, Christina Chapman ran a covert hub that helped North Korean operatives infiltrate U.S. firms, netting $17 million in stolen salaries.

UC Santa Barbara researchers developed a soft robotic intubation system that achieved 100% success rates for experts and 96% for paramedics with minimal training.

Scammers exploit probate filings to target grieving families with fake fees and debts, Kurt "Cyberguy" Knutsson reports.

Automotive giant Stellantis becomes latest victim of widespread Salesforce breaches affecting companies like Google, Cisco and Adidas this year.

A woman from Washington reunited with her missing Maine Coon cat Louie after 11 days using Love Lost, a free AI-powered pet recovery platform.

Expert cybersecurity tips help Mac owners remove malware infections and strengthen defenses with antivirus software, password managers and system updates.

Meta's AI chatbot training rules bans sexual roleplay with minors and block access to child abuse material as regulators scrutinize its safety measures.

Online banking users face a new threat: web injection scams that overlay fake pop-ups to steal logins. Here’s how to spot them and protect your accounts.

Meta introduced Teen Accounts to Facebook and Messenger while launching a School Partnership Program for U.S. educators to report bullying within 48 hours.

Executive order signed by President Donald Trump tasks Robert F. Kennedy Jr.'s MAHA Commission with using AI to find new cures for childhood cancers.

New FileFix attack tricks Facebook and Instagram users into running malicious PowerShell commands disguised as Meta account maintenance to deploy StealC infostealer.

Stocks & Oil, Sat Jun 18th, 2005

Stocks & Mutual Fund