Tuesday October 23 20128:00 AM CST
We have spent the last month and a week warning of the danger of being long this market. Now that reality is happening. Yesterday we noted apparent tops in MCD and CAT. Today duPont Chemical announces a lower forecast and will shed jobs. This is another classic industrial stock broadcasting weakness to come in the world economy. Notice duPont made a mere one cent a share, in other words duPont is opearting world wide at break even.
Earnings go flat at economic bellweather 3M.
The Dow has continued to drop in pre market trade now at 7:50 AM CST down 149 points. This could be an ugly day. We hope you have taken defensive action as we have outlined.
The internal indicators have been trending sideways in no investor land, not offering neither a great low risk entry. October continues to live up to its ugly reputation.
This weekend we pointed to the declining energy prices as evidence of a declining economy. Oil topped last in 2008. It may well have topped first in 2012.The XES energy service ETF turned down the last few days.
XES and Crude Oil
Crude oil is the solid black line, now XES and Crude are both falling. XES managed a bounce in October but has fallen back below the 200 bar Moving Average. This is not a positive sign. Weak oil prices meana weak economy, period, don't let the talking heads on business cable tv fool you on that one.
It is interesting that you mentioned in class today that oil revenues are falling based on less demand and lower prices for crude. Last week Shell Oil requested that they be granted a waiver to sell oil as an export. The United States stopped selling oil as an export outside of North America in the 1980's. When I first read this in Wall Street Journal, I thought and read it as the US getting back in the net export profit business. However, it now makes sense as Shell is trying to keep its earnings per share from falling or showing flat and immediately affecting the share values.
Posted by: Keith Wildes | October 23, 2012 at 07:38 PM