The indexes all rallied today, despite the fact that oil also rallied impressively off support:
futuresource.com
As you can see, in tonight's session that rally has continued modestly, and a test of resistance at $54 looks very likely soon.
Despite that, the Nasdaq 100 futures are rallying strongly, up 11 as I write this.
This market will find a reason to rally now, even if that means ignoring things that most people think drive stock prices. Oil is one of those things... it only drives stock prices when talking heads can't find anything else that can plausibly "explain" the behavior of the indexes. So they start talking it up, and people believe there is actually a connection when there is enough talk.
The charts and technicals tell the story here, and represent the summation of forces far more powerful than the price of oil futures. Over the last several years, oil has rallied steadily, sometimes markedly, but the markets have largely ignored this. Only on occasion has price movement been significantly influenced by oil futures.
This has surprised me---I expected that sooner or later the markets would realize that oil has drastically increased in price over the last several years, far faster than the reported rate of inflation, and they would react. But they have not, with only a few exceptions. How the markedly and steadily increasing cost of energy can not be inflationary escapes me.
T |
