Middle East Crisis - Should We Still Buy The Dips?
Middle East Crisis - Should We Still Buy The Dips
?With the middle east crisis getting so much air time on the 6 pm news of an evening. Many traders are wondering where to invest especially with all the volatility in crude oil over the last month. But as the mentality in the market over the last 12 months has been 'Buy The Dips' is this really likely to continue? Or will the unrest in the middle east be the catalyst to bring the market down?
At the start of march the dow jones transportation averages was the first to get hit when the crude oil started to spike upwards. But any astute trader should expect that. Because the transportation average is the grouping of stocks that move things around the US and throughout the world. They certainly need energy, in order to move things around. If you have coal you have to transport it, if you make corn you have to move it, if you produce widgets you have to move them out to market.
So the transportation stocks are the first ones that are going to feel the brunt of high price crude. In 2007 - 2008 crude oil skyrocketed up to $145 per barrel. At the same time the US stock market crashed, and it crashed hard. The S&P 500 sold off all the way down to the 666 level.
In 2007 - 2008 when crude oil was rallying over $100 per barrel, the S&P 500 came down, but you did not just have the crude oil happening. You also had a scenario where the derivatives market was crashing, the back of the real estate market was broken, and one of the worst financial crisis' on record. You had all this, and crude oil going through the roof. All these things combined broke the back of the S&P and the entire U.S. economy.
What is different about the run we are having on the market right now, is that you have the stock market moving higher. You also have crude moving higher. But that is it! You do not have any real estate problems, there is no derivatives meltdown.
The rally that we are currently seeing in crude has traders thinking if crude will continue higher. That will send the S&P down. But as soon as we get use to crude trading over $100 a barrel and also accept paying $3 or $4 dollars at the gas pump, then the majority retail traders think, everything is back to normal, and get back into the mentality of buying the dips again.
It is highly likely that the stock market can sustain the crude oil rally as long as crude does not explode higher. If for some reason crude did move higher, then that could be a big problem. PayPal IPN Limitation - Uh Oh Online Shopping Review - Isnoktam Launches True One-stop Shop If A Lights Bar Doesn't Meet The Following Conditions, Don't Buy It! Shopping Online For Forklifts For Sale is Better Than in a Retail Store Fantasy of Huge Saving through Shopping Online Is it better to Prepay for 12months How to buy the right watch? Four Easy Steps to Help in Buying Low Cost Insurance for Restaurants How Much a CNA Makes: Salaries & Average Pay Common Problems When Online Shopping Discover Discount Online Stores for Grocery Shopping New Playa del Carmen Condos – Why You Should Buy Now Find out where to buy a kindle