It would be unwise to ignore what is obviously the start of a selloff, just because the indices have mostly held up. We are beginning the correction, led by the same sector that took us higher since last August.
I am of course talking about the natural gas and oil sector. Names like BAS, HCLP, SLCA, ETP, and EMES were one of the three pillars of support of the rally. Today, BAS is off 7% and HCLP is down 5%. The entire oil and gas sector is being beaten down.
But it’s more than just that. It’s all commodities indiscriminately. Energy, food, precious metals, raw materials…with a few weak exceptions, they’re all in a clear tailspin.
And the EURUSD is back at 1.29. That’s the key element driving it all. This is 2010 all over again. Except for the moment, people seem willing to pretend that deflation isn’t winning.
Buckle up for a rough September.
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I agree, The SPX may drift up to 2033 over the next few days but the breadth is bearsish.
September is usually a bad month for crude.
“Shorting the February crude oil futures contract in mid-September and holding until on or about December 10 has produced 19 winning trades in the last 30 years.”
I’m not going to short any oil/nat gas stocks, but am hoping for further weakness in the sector. In particular, I would like to buy CPE cheap (small permian play). They just announced a secondary today- stock could really take a beating.
I have my eye on RICE after a correction
A lower EUR is what the ECB wants, it’s being manufactured. People seem to be taking a lot of cues from FX markets these days, hasnt been a good barometer for a while. But I agree, SPX looks tired. 5%-10% correction would be healthy
I agree completely that the EURUSD move is manufactured. It’s still probably going to force a correction on us though.
On point of view is that FX markets sort of have been a good indication, and by that I mean the EURUSD ran to 1.4 and our markets soared.