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Oil speculation led the market today
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Oil prices led the market today, a day reminiscent of the roller coaster days last year. The Dow started the day higher despite shaky closes in Asia markets, Nikkei closing -83 points, and the Shanghai Composite closing -77 points or 2.5%. Housing prices surprised to the upside, as did the consumer confidence release at 54 over the expected 48, which yanked equities upward, the Dow touching a new high at 9600, nearly 100 points up. But as oil followed equities upward the important $75/barrel level brought fresh sellers into the market. Selling of oil prompted oil stocks to lead the sell off, dragging the entire market down to close up just +30 points to 9540. Oil meanwhile closed down -$2.50 to $71.80. Rumours of a leak in the oil inventories circulated among traders, which will be revealed tomorrow. A similar volatility occurred yesterday, letting the Dow close just +4 points after a much higher open. Is this end of summer volatility or are buyers starting to jump out, and sellers getting ready? Since oil speculation is leading the way, tomorrow will be very important with the oil inventories release at 10:35am.
The dollar held on to its thread-like support today against the euro and Australian dollar, but continues to see strength vs. the British pound. The continued bullish yen is pushing into important levels vs. the dollar and other majors, which has been completely divergent with the U.S. stock market: as the Dow continues to make higher highs, the dollar/yen is surprisingly pushing to lower lows, but typically the dollar/yen and Dow move along in similar patterns. This could be another signal that equities are now toppish, similar to last year prior to the fall in the markets.
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