Wednesday Sept 2, 2009
Once upon a time there was the GM bellweather Theory. The idea was that as GM went so went the USA. It may be that theory is still valid, GM is after all now post bankrupt and essentially a govt jobs program. But I digress.
I suggest the XOM Bellweather Theory. The more we investors vote on a future world wide demand for energy, the better the future for the economy. We have here a non confirmation, repeated three times this summer by XOM for the overall market. At top we have the price of oil, at bottom the SPX. XOM has three lower highs shown by the arrows. Yesterday's sell off generated a daily sell signal on XOM via the Parabolic Stop and Reverse. THat is circled at far right,
Notably XOM has not been able to move above its 200 day moving average, at least not for long and that was back in June. This suggests the markets will head down after Labor Day.