Markets have shown extreme resiliency to sky high oil prices......
Oil sitting near $126 has forced markets to trade in a very narrow range.....
Oil prices are affecting world economy & inflation picture in a big way......
So ...why the stock markets are NOT in freefall.......
Because.........
Oil is UP to adjust for slumping US$....
Oil being UP will force worldwide effort to increase the efficiency of everything which uses Oil...
Oil consumption will actually decrease...thus the price of oil will either head down or stay in a very narrow range...going forward.......
Alternative energy is getting a very big boost due to $126 oil....
Most corporation & world economy is looking @ reducing their Oil import/consumption bill in a panic mode NOW......
Solutions to oil cost will be on many front.......
US consumers have accepted the joy of owning smaller cars NOW.......
High Oil related cost of owning a car,heating house,lighting house in terms of higher KWH cost IS evident to every consumer worldwide.......so adjustment to this NEW REALITY is already happening in most household.
So...the markets are focused on forced solution to horrendous waste...which we all were used to..this will improve productivity further everywhere...when we LEARN to live with LESS.....
Markets always looks ahead.....by end of the year ...world economy will get used to controlling all waste related to high oil prices.....
High Oil prices are here to stay.......
Market expects everybody to live according to this new reality.....
I personally believe that high oil prices has been discounted by the markets already...and we are ready to move ON to the business of accelerating GROWTH in 2nd half of the year ...which starts in 21 days....
2nd half will show growth in US economy and the world will take notice.....
I am expecting Q4 to be high growth Q......so markets will build UP from here.......
Now...the biggest question is how to position to optimize returns......
All strong sectors will continue to outperform as we go forward.......
Strong sectors include Tech,Solar,Ag,Oil,Steel,Gaming.......
Among these strong sectors Tech is a laggard which has to play catch UP......
Laggards like Home builders,Retailers & Refiners are also poised to do well going forward.....
Please do your own homework through FA/TA and know your stocks well.....in terms of historical pattern.....
Always stay Diversified in minimum 5 stocks in many sectors......
Here is my $ weighting as of Friday's close :
NTES online gaming 11.9%
RIMM Tech 25.2%
SOL Solar 23.9%
TOL Homebuilder 14.4%
V Financial 24.8%
BLOG does NOT give buy or sell.
Saleem
8 comments:
V & MA TA:
http://www.youtube.com/watch?v=-0c4qKwIQV0
Saleem, what do you think of this?
Hi Saleem...thanks for all of your posts. I have learned a lot from them. Just a question/thought on 'V' - with all of the stats indicating higher consumer debt, do you think V (and MA) are at risk with higher bankruptcies andhence write-offs - like what's going on with mortgages today? Thx.
Hi A,
Thanks for your appreciative note.
I am glad that you find my post relevant & useful.
Worldwide use of plastic is exploding.
Carrying cash is not safe in many countries around the world...so V & MA benefits.
With economic downturn...everybody is optimizing their cash flow by getting free credit on many visa cards...playing the due date & low interest rate offers.....
I personally believe that transactions are going to increase exponentially each month.....
V & MA will do very well in this environment.
Saleem
Morning SALEEM
It is pouring rain in DC today and cold 45%
Should be a good day for V. I am hoping for more run in SOL!!
THe talking heads are saying oil going down to $120, Hmmmm.
Also saying refiners should go higher from here! The botom is in and demand is up and refinery output is limited keeping a floor in on the price of Gasoline. In aohter words profits should climb form here.
Have a great day
M
Hi Madmax,
Cloudy & Cool in Toronto also.
Nice optimistic take on everything.
yes..Oil is down ..good for the economy & good for markets.
Saleem
Wow, unreal action in V....
Saleem, what are your thoughts,
VISA
Is killing me here!
I do not know the reason for the sell off. May be shorts having a field day
Comments
Hi Troy & Madmax,
V was overbought big time...
So...it is natural to pullback to support level...
Looks like $78.10 was the support.
Target on V is $105...
All part of orderly pullback in V..
Stay put...V will go UP as quickly also.
Saleem
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