Friday Feb 1 2019
Crude and Stock Prices Rally
Stocks Post Best January in 30 Years.
An average of 718,000 barrels of crude traversed America’s railways as of October, an 88% increase from a year earlier.
Wall Street Journal Today
Among stock market ‘watchers’ there has been a lively debate. Did the 4,000 point drop in Q4 of 2018 begin a new bear market, or was this just a much needed correction? To be fair to the bears (down market) the NYSE advance decline line actually reversed on both a daily and weekly basis. And the DJIA has yet to surmount its previous high. The Transports have not done that either so we don’t have a genuine Dow Theory buy signal. But those with the courage to hang long since December 24 600 point drop have done well.
There has been plenty of negative action to give rise to bearish action. Facebook lost half its entire market value in six months falling from 220 to 125. On better than expected earnings, it soared back to 166. Chalk another on up for social mood turning on the proverbial dime.
And it has been tough sledding for General Electric. GE was the only stock in the original Charles Dow 1896 list still in the index. But honestly the social mood red flags abounded amid CEO Jack Welch exit around year 2000. He divorced his wife of decades for a 20-year younger model. He authored a series of books, one of the last titled Jack: Straight from the Gut. (how’s that for modesty and hubris?). And then there was his $400 M severance package including a swanky NYC condo. The stock price fell from $30 to about $7.50 last week. It has now recovered to $10.16. Its external auditor KPMG of some 110 years looks to get the boot amid questions about its procedures.
Most of the major stock indexes are now testing downtrend lines from the October 2018 top. We will need another couple of weeks to see the outcome. The 400+ point increase Wednesday was impressive. Whether that was a start for a 2019 bull are a climax blow-off we still do not know.
Meanwhile oil prices have advanced from $42 to $53.69 this morning. Oil and stock prices remain in a sort of DMZ as we described last week. Energy ETF XLE like the stock indexes is testing its down trend line. Even Energy Service XES rose from the dead at $8 rallying to $10.95. Again it is at resistance.
Like any great Saturday morning movie serial, return next week to see if the bulls or bears prevail.
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