If you’re a trader, you can’t like what you saw today. In fact, if you’re just about anybody but a speculator in the oil market, you can’t like what you saw today.
US stocks essentially flat, as stock traders can’t push prices much higher while crude oil futures keep pushing new highs amid the swirl of revolt and history sweeping across North Africa and the Mideast. DJIA adds 9 to 12067, after rising as much as 57 during the day; S&P 500 rises 2 to 1308, Nasdaq Comp gains 11 to 2748.
ADP comes out with bullish take on jobs, but the market is fixated on crude. Nymex crude and Brent both hit 2011 record highs. There’s no doubt rising crude prices crimp the economy, and the higher they go, the bigger the crimp gets. This is a problem that’s getting more traction on the market’s radar.
We watched crude prices climb all day, and I just don’t like the direction they’re going. Nymex crude rose above $102/barrel, a fresh record for the year and the highest price since September 2008; Brent rose to a fresh high as well, $116.35/barrel. We’ve been watching for the $103-$104 level on Nymex; there’s technical resistance there that, if broken, will let the Vandals break through the walls and sack Rome. Or something like that. You get the picture.
If it crosses those levels, and I think somehow that’s inevitable, I see another sell-off in the stock market. The only question is how big a sell-off. A 10% correction wouldn’t surprise me at all, in fact corrections like that are often healthy. Is a 20% correction possible? It depends.