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The Light Crude Continuous Contract closed at $66.13 a barrel Friday, after hitting an all-time high at $67.95 a barrel earlier in the day. A week from Monday is Labor Day, which marks the end of the summer driving season. Consequently, I believe, oil hit a short-term top Friday or will top next week.
Recent economic data show persistently high oil prices, along with higher interest rates, are slowing U.S. economic growth. Durable Goods Orders fell about 5% last month, and Walmart announced sales will be lower than expected. However, business inventories are lean. A slower economy will lower demand for oil.
The SPX daily chart below shows an orderly pullback in August. Currently, SPX is oversold enough to bounce into the Labor Day holiday. Major support is around 1,200, i.e. the 200 day MA, and Price-by-Volume bar. There are several major resistance levels working together to create strong resistance, i.e. the 10, 20, and 50 day MAs, the Parabolic SAR sell signal (red dots), and the Price-by-Volume bar, all between 1,220 and 1,225.
There's typically a bullish bias the week before a holiday, and over the first few days of a new month. However, the market has been selling into weekends (and into rallies last week), which is bear market behavior, it's a seasonally weak period, and SPX has open gaps at 1,174, 1,143, and 1,138. Oil prices and economic data will continue to move the market.
There are many important economic reports next week, which should generate a great deal of volatility, in the seasonally low volume market: Mon: None, Tue: Factory Orders, Consumer Confidence, and FOMC Minutes, Wed: Revised Q2 GDP & GDP Chain Price Deflator, and Chicago PMI. Thu: Personal Income, Personal Spending, Unemployment Claims, Construction Spending, ISM Index, and Auto Sales. Fri: Non-Farm Payrolls, Unemployment Rate, and Hourly Earnings.
The Dow Industrials were hit hard by high oil prices recently, and closed below 10,400 Friday, while Nasdaq held up relatively well. If oil prices top next week, DIA calls (and puts on some oil stocks) may be buys on pullbacks. Also, there are several Dow components that were hit particularly hard recently.
Charts available at PeakTrader.com Forum Index Market Overview section.
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 four years.
Investing - Google News
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25 Ways to Find Companies to Buy
When you start your program to purchase your "ideal" company, you quickly realize that your ultimate success will depend on two primary skill sets: 1) Your ability to FIND viable companies that are for sale, and 2) Your ability to effectively qualify the potential acquisition investment once found.This article is about only step one, how to creatively find viable companies and one's that are able to be purchased.
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Coca-Cola - A Value Stock?
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How to Use Annual Report
There are many steps in calculating the fair value of a company. However, before we even do that, it is imperative to know how a company earns its profit.
Going Offshore For Asset Protection
There are a number of key reasons why individuals and businesses consider going offshore for asset protection purposes.The asset protection advantages the offshore world offers extend from protecting a business from excessive taxation to opening doors to enable wealth and asset enrichment via the utilisation of offshore investment opportunities.
The best way to avoid being hit hard by a stock market crash or another Enron/Worldcom fiasco is to make sure you don't put all your eggs in one basket. Diversification helps ensure steady growth of your net worth as you accumulate more assets.
Investing and the Fear of Regret and Greed
People tend to feel sorrow and grief after having made an error in judgement.Investors deciding whether to sell or buy a security are typically emotionally affected by whether the security was bought or sold for more or less than the current price.
Investing As A Sport?
I said last week that money doesn't generally buy happiness, but the lack of it can buy absolute misery. This, by the way, is not just my personal observation.
Sell Discipline for Investors: Importance and Execution
Investors usually don't have an aversion to buying an asset. The real gut wrenching decision is when - and if - to sell.
Stocks: Reduce Risk Yet Maximize Profits
It is important to note that every smart investor wants to minimize risk while maximizing profit potential. Yet conventional investment theory tells us that in order to increase returns, you have to increase risk.
Learn How to Lose and Risk Management
One of the leading traders on Chicago Mercantile Exchange, because of a single trade lost everything!For all of his years of experience and money, he had failed to master the most important concept in trading: Risk Management!Each trader seems to have his own unique way of identifying market opportunities. One buys a stock in the hopes of never having to sell it, while another might hold a position in the market for a day or even just a few hours.
Part II of Day Traders and Swing Traders and Options? Maybe!
Before every protective put trade it is possible to calculateyour anticipated maximum loss. Use the formula: (stock priceminus strike price) plus option price.
DXPortfolio: A Great Passive Investment of 25% to $40% per month
First, I need to explain about e-currencies or digital currencies. DXPortfolio are based and supported by the supply and demand of e-currency.
Angel Investors: Who They Are & When Are They Appropriate
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