Oil, Gold and Interest Rates
Will he, or won't he?
Will Fed head Ben Bernanke raise Fed Funds another ¼ point or will he stand pat?
Maybe he'll stand aside.
Maybe he'll change his wording to, "...expect future increases".
Then again, does it all really matter?
LATE BREAKING NEWS:
NEW YORK (MarketWatch) -- Crude ended just shy of its record high Monday after industry giant BP PLC threw the market into a spin by shutting down 8% of the country's oil output to fix a leaky pipeline. [BP is shutting down its Prudhoe Bay oil field in Alaska]
Or, how about this one?
A senior Israeli officer told DEBKAfile: We can go on bombing Lebanon for many weeks, but that will not stop the rockets.
Lots and lots of stimulus for the markets to deal with.
I've been talking a lot about the Middle East and by extension Oil, so let's take a look and see whether Crude is confirming the 'Bullish' news (or if the bullish news is warranted by the charts)?
Chart 1 - Crude Oil very Bullish
The chart of Crude Oil has been showing text book action.
A breakout from a triangle formation (green lines) in late June and subsequent re-test in late July. The re-test looks successful and the MACD and RSI have turned upwards.
The next level of resistance comes in at the July high of $79.86 (blue line).
A break above that high brings $90 Oil squarely in focus!
Will it happen?
The market is certainly acting as if it will.
But why speculate, we'll find out soon enough!
One thing's for sure, the public is conscious and well aware of the effects of Higher Oil- Less money to Spend!
Here's another significant development to watch:
Chart 2 - 30-Year Bonds (top) Dow Jones Industrial (bottom)
The 30-year Bond recently broke above resistance at 108.5 (interest rates moved lower). The Bonds are undoubtedly saying that a combination of weaker than expected Job numbers, housing, retail and now, higher Oil prices are all Signalling an economic Slowdown.
Interestingly enough each low in Bonds preceded the corresponding low in the Dow by roughly 1 month (blue lines). If this correlation continues it will signal that the Dow will break above resistance at 11200 - 11300 by early September. [If this happens the HUI will almost surely rise above it's July highs].
So get this, a rising Oil price combined with an already soft economy causing
the Stock Market to RISE!
The markets are celebrating, "No More Rate Rises Thank You Mr. Bernanke!"
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