Hi Slagle,
Personally, I think oil does not affect the market significantly, except very occasionally it can affect the market in the very short term (a few days).
Actually, I once calculated the correlation coefficient between oil prices and QQQQ prices. Conventional wisdom would predict a negative correlation---as oil prices rise, QQQQ goes down, and as oil prices fall, QQQQ goes up.
In fact, I calculated not a negative correlation, but a positive correlation. The relationship was not very strong, but certainly there was no evidence at all to support the notion that the market moves inversely to oil prices.
I stated in detail my views on how the market is affected by oil, economic reports, the FOMC, etc. on other posts. You can find the details here:
Message 21301491
Message 21242727
In a nutshell, I don't think these things have any significant effect, except in the short-term (less than a week). They have nothing to do with the dominant forces driving the markets, but serve to provide fodder for the talking heads to throw around. They are essentially a distraction, even a diversion (not necessarily an intentional diversion however). I keep aware of these things, but rarely take them very seriously.
RE QQQQ, I stick with my story. There is considerable pressure from a number of directions for QQQQ to correct here. It has accumulated considerable volume pressure (downwards) over the past week, the result of professional distribution. The market has not yet processed this, but began to do so today. It will keep processing that until it is dissipated or until we see evidence of accumulation volume that is very strong. I don't think we will see this kind of volume at these relatively elevated prices. Professionals buy into weakness and sell into strength. QQQQ is very strong now, despite today's pullback.
I think QQQQ will pull back to test the support levels I detailed a day or two ago (some of these have changed slightly since then because they are dynamic).
T |
