Donald; I have for a long time encouraged people to watch the price
of crude oil. Of all commodities oil is figured into the price of every thing we do and touch. We are at this time the benefactors of
a low oil price. Here in the US we are effected by the price
of oil more than most of the rest of the world. Our infrastructure
being ahead of most of the world allows the logistics of supplies
to work here in a fluid way that gives us a real edge productivity
wise.
Even in the labor market, workers here can commute in a way
that lets the skill match the demand for the skill, all that is
stimulated with cheaper oil and curtailed as oil prices go up.
The price of other commodities are also important but none of them
can match oil.
The coupling to the stock market is not as direct
as interest rates due to the short term thinking of the financial
wizards of our time however if we reach out some we see the change
in oil prices likely has more effect than interest rates, OR at least as much because as productivity goes up profits are helped out
and profits compete with interest rates.
There is a war between the forces of those who want to control every thing via interest rates ( old money ) and new enterprises coming on line that need to borrow to get started. It's here too that cheap oil helps out in more ways than one by aiding the new upstarts.
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I think calling a top to the stock market may be better achieved
by looking at raw commodity prices in general. ( not so much gold
or silver these things take a back seat to the amount of oil, copper,
aluminum, steal, lumber and cement we use. Keep an eye on the
basic commodities when and if they surge up in price, other things
will follow and inflation will result causing interest rates to respond and the stock market will dive.
Jim
PS if you live around a big city where there are scarp yards keep an
eye on scrap prices , like what the going price is for the crushed
wrecked cars and junk you can sell may give you some warning,
is it going up or down , or up at a faster rate percentage wise
than stocks. I picture first a surge here..then a hike in interest rates and a melt down or correction across the board.
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