It’s another day where oil prices, correlated 90% to the S&P 500, rise pulling stocks higher along with it. Thursday, it's Venezuela saying Russia, Saudis and Qatar will meet next week to discuss high production levels.
Please…Venezuela?!? They are habitual liars about the color of the sky.
Nevertheless, oil price watchers took their assertion as being fact despite the country’s habitual lying and taking rumors as truth. It may be so, but given the three country’s recent previous denials about production cuts and Venezuela’s conflict of interest, well you’ll understand my skepticism.
Stocks rallied again with oil ignoring another lousy day of poor economic data and weakening corporate earnings guidance. But clearly again, the tape is the tape and a disciplined trader should respect it. But, playing the declining oil price production card is becoming a joke played too often.
Thursday economic data was mixed to weak once again. Durable Goods Orders rose sharply to 4.9% vs prior -4.6%, but ex-Transportation (aircraft) the reading was 1.8% vs 1.07%. Jobless Claims rose to 272K vs prior 270K; FHFA HPI fell to 0.4% vs prior 0.06%; and Kansas City Fed Mfg Index fell again sharply to -12 vs prior -9. Also many corporations led by banks and retailers guided earnings and sales lower—not good obviously.
But overall, bulls were blinded by a surge in oil prices once again.
Market sectors moving higher included: Most stock and energy sectors.
Market sectors moving lower included: Volatility (VIX), China (FXI), Brazil (EWZ) and India (EPI)
Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).
Volume was quite light once again on buying and breadth per the WSJ was positive.
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Another short commentary as I’d like to see how the week closes given now an important turn is possible.
Not that it seems to matter these days, but economic data Friday includes GDP, Personal Income & Spending, Consumer Sentiment, Oil Rig Count and 3 Fed speakers to top things off.
Let’s see what happens.
Dave Fry is founder and publisher of ETF Digest and has been covering U.S. and global ETFs since 2001.
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