Photo by JR Lancaster
For the record, fossil fuels are not the remains of dead dinosaurs. Most of the fossil fuels were formed from prehistoric plants and animals that lived hundreds of millions of years ago.
So for now, our Rallysaurus is safe from extinction. However, its second cousin twice removed, crude oil, hasn’t fared as well.a
Crude Oil traded briefly below $40.00 a barrel for the first time since early April 2016.
The Wall Street Journal reported today that “Oil enters a bear market after settling at $40.06 a barrel, down more than 20% from its recent high.†If one looks at a daily chart, indeed that is true. In early July, for no more than a nanosecond, oil went into a bullish phase.
Today, the 50 day moving average crossed beneath the 200 DMA giving credit to the WSJ headline. However, to assess if oil had a real chance for a rally, one must look at the weekly charts.
On the weekly chart, a trend change from a Bearish into even a Recovery Phase USO (U.S. Oil Fund) never occurred. The last time oil traded above the 50 week moving average was in July 2014.
We could say that oil just celebrated its 2-year disappearing act with no immediate plans for replenishing meat back to those X-Ray bones.
But what about our Rallysaurus?
Interesting statistic:Â For 12 days in a row, The S&P 500 has not moved up or down by more than .50%. That is the longest streak of basically no volatility since September 1995 when it barely moved for a record 14 days in a row.
When I checked back to September 1995, the SPY price action took a necessary breather after a year-long rally. In 2016, we have a completely different scenario. The SPY began the year with a sharp decline. Currently, after making new all-time highs, it has stalled.
So here we are once again with a prehistoric statistic not really relevant in our modern market. A market juiced up by low to negative interest rates with virtually nowhere else for investors to find returns on their money, complacency or lack of fear exists.
