Watching Oil, USD – Earnings To Suck

Watching oil here – now exhibiting some “bottoming characteristics”. Still very early ( as thus far only the 1 minute, 5 minute and 15 minute charts have reversed ) but…….

What do we know about “the price of oil” and the “value of USD”?

Oil is priced in U.S Dollars right? A low in the price of oil could very well mark the high in USD no?

Both Gold and Silver ( including the miners ) look to have found some support these past days, regardless of USD poking a touch higher.

Looking at oil related currencies such as The Canadian Dollar as well The Mexican Peso we can also see USD weakness.

A flood of money coming into commodities in general would clearly suggest USD topping out “medium term”.

The SP 500 has now retraced a full 50% of the recent plunge ( now at 2035 ) so even a touch higher at 2051 would provide for a low risk entry – short.

Earnings season is gonna “suck” as there is not a U.S based multi-national company on the planet that can “honestly” report that they’ve increased bottom line profits in the face of the rising dollar, let alone the number of energy related companies that just got their asses kicked by falling oil.

It’s impossible.


8 Responses

  1. madness January 8, 2015 / 8:05 am

    Hi Kong (belated Happy New Year)

    Well, another year and already another round of verbal shenanigans overnight from the Feds Evan propelling risk (equities) even higher.

    In the past, a rise in commodity currencies, Aud/Nzd/Cad was associated with risk on and a rising equities market. Are you now saying that a potential floor and rise in oil and the subsequent rally in these currencies will denote risk off and a fall in risk (equities)? I can’t see how this would work?

    Yesterday’s action in the equity markets, when oil started to rally, seems to suggest that a rally in Oil would be seen as positive for US stocks. Add to that rising commodity currencies, do not see how it would translate in to risk off?

    I think many stock analysts have already made very low estimates for earning so even if they do come in weak, they’ll be “higher” than “expected” so it’ll all be considered good news.

    • Forex Kong January 8, 2015 / 8:14 am

      These things can just as easily flip in a “short to medium term” time frame yes so… would not be beyond me at all to see AUD, NZD, CAD as well MXN move higher against USD “regardless” of the usual correlations of these risk related currencies…

      Now….ask me if they will move higher against JPY?? And there you will get your answer. No they won’t.

      We’ve got to “Move with the times” and in this case….with oil having such a large impact on global markets…an inverse move in USD here makes sense.

      What the “completely rigged U.S stock market does” is another story, but I see set up for the larger “intermediate decline” to commence very soon.

  2. madness January 8, 2015 / 9:21 am

    Thanks for that…

    Can’t see what the catalyst for a intermediate decline in US stocks is though. If NFP come out good tomorrow, could see 18k on Dow – since the low on Tuesday afternoon, this has so far rallied 600 points on absolutely nothing. Seems like everyone has forgotten all the bad macro data that came out on Monday.

    Markets will then “wait” for the ECB meeting on 22-Jan for hints of QE. If this is in the form the markets like, absolutely no top for the US market.

    Just look at US stocks today – a gap up on opening and almost an hour in to trading and not a single down bar on the 5 minute. That is some serious buying pressure. Looks like market will hold the 17800 level in to NFP.

    • Forex Kong January 8, 2015 / 10:33 am

      It’s interesting Madness – that you can clearly see the “bounce higher” but to a certain extent are able to “ignore” the previous 5 day drop.

      We are “flat now” since November, but can see several signs suggesting “lower” is the current medium term path.

      Unfortunately I don’t feel The ECB will have anything to offer….and I expect U.S earnings to dissapoint.

  3. R January 8, 2015 / 9:35 am

    This rigged mkt is going up till next ecb announcement…tat will be when usd start to tank…dun bother to trade till then….same crap always…down to fomc..den booomm up…den grind n grind new aths..

    • Forex Kong January 8, 2015 / 10:34 am

      Seems reasonable to me……or at least that would could easily “remain in range” another week sure.

      • madness January 8, 2015 / 10:54 am

        “It’s interesting Madness – that you can clearly see the “bounce higher” but to a certain extent are able to “ignore” the previous 5 day drop.”

        I can see that drop but equally I can see that the entire drop has now almost been recouped (save a couple of hundred points as at time of writing).

        This is the first full week of trading for 2015 and the majority of the drop occurred on Monday and Tuesday. Yet in two days, the Dow has managed to recover all of the Monday and Tuesday’s losses and then some and the day is not even over yet. Should NFP come out good tomorrow, we may see 18K without any effort.

        • Forex Kong January 8, 2015 / 11:07 am

          18k is only another 140 points!

          So again……as with all of us – “we see what we choose to see”.

          If “save a couple hundred points” is of no issue to you…..then how can + 140 points be?

          It’s the age old story of bull vs bear…..and everyone leans towards the side they “want” to see come to fruition – no fault in that.

          With markets occilating some “several hundred points” up then down over these past weeks….ya 200 points…..140 point etc…

          Makes no difference to me as I’m looking at “intermediate time lines” and am siding with the bears moving into March.

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