Energy Burst
The Other Energy
Let’s be honest, this rally was the first real attempt to break out of the trend of selling on bad news. Let’s also be honest and admit that the news was pretty gloomy but what the Markets told us was that the unemployment numbers had already been priced in. I do believe it’s as simple as that. What can I say, I’m simple guy. Is it the bottom? I’m simple, not arrogant.
Still, it was very pleasant to imagine that most of the worse case scenarios, including the surging unemployment was neatly factored into the massacre we had seen in every sector. Let’s take energy. I hope oil does go down to $20 a barrel. We can all hope and argue that it’s totally possible but let us not forget that not too long ago a lot of us made the exact same argument and added another zero to that 20. Quite pleasing, we never made it there. Profits simply had to be taken especially when demand was falling off of a cliff.
So what happened yesterday in the Markets? Well, more bleeding in the energy stocks like CHK, WLT, SUN, SLB, HES, CVX, and the etfs like USO and DIG in the morning hours. Did they hit a bottom? Who knows (I guess I can stop asking that moving forward). What I do know is that most if not all reversed with the rest of the overall stock market rally yesterday. This was a good sign and one I’m certain will be talked about.
That’s the good news. Here’s the bad. The Market will undoubtedy be wondering and try to envision (as it always does but more so in a Bear Market) what’s the next big bad thing lurking around the corner. For instance, how high has it priced in unemployment and it’s devestating ripples or trickle down? 7%, 10%, how about 15%? What is the worse case scenario? Is it the Depression numbers? Is the Market content at bad but just not the big D type of bad? That’s something that certainly is on the table.
I think for now, and by now I mean by Monday because things can change so fast, the Market sees some silver lining in several forms like the upcoming holidays. It’s something to look forward to. Period. Next, the new President will certainly be exciting to watch. This guy won’t be on a ranch his first several months in office. He’s excited about making change and he’s a true work horse. You can be sure that he’ll be all over everything and will make do on every single promise he had made. If he doesn’t, the Market will not like it but I think it will give it the time and space it needs, let’s all hope, to absorb all the negative numbers that we will continue to see at least for the next two or three quarters.
Next week, it would be nice to see the DJIA break 9000 and close above it. It is possible and would be a further added support. We all need know that we can use any support we can get our hands on.
