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Energy Back in the Danger Zone
Posted on 09/25/2006 16:39:02 | Link | Post Comment
0920 EST Tuesday March 28 2006
Good Morning: For several months now we have been expounding on the fear of a World running out of resources especially Energy and posed the idea that this may be part of the reason Gold, Silver, Platinum, Palladium and Copper have all soared so much within recent weeks. This morning the Energy complex is close to setting new monthly highs and since we there are only a few days left in the month of March, that tends to project higher prices in April and possibly all the way through June, in an anticipatory run towards the start of the '06 Hurricane season and the increase that normally accompanies the so called driving season, where trippers and vacationers tend to take to the highways in droves. This year they are already forecasting Gasoline prices could rise as high as $3.00 per gallon and Gasoline futures have been reflecting this. It looks like it's going to be another rough year with potential new highs in Energy, as we enter the danger zone...
The other influence on Energy that could also cause prices to soar is the value of the US Dollar. A few days ago at the peak of the rally, we postulated the idea that the US Dollar could be at a critical turning point that might be the point of no return and from that point forward, the US unit dropped like a stone, rather unexpectedly for some and it is still dropping this morning... Not even a general strike in France can stop the Euro from advancing higher, so far today. This could have a continuing salutary effect on an already soaring Metals sector.
Not to get too carried away with this so far, because we still have to face judgment day at the Fed which could amount to being US Dollar bullish, we have to be prepared for that possibility, as so far we have a potential 3 wave rally in the currencies and if this is to turn into what could become a real bull market, we would need to see the currencies continue to advance strongly or the Dollar continue to break down...
The Equity markets have to deal with the Fed's decision on rates today, so trying to predict the outcome is a bit of a crapshoot and they will have some dampening from higher Energy prices also. However, suffice to say that should the Fed surprise and leave rates unchanged it could have some dramatic consequences for stocks, that in a way the market seems to have been foretelling of late by their bullishness.
The wordage alone from the Fed might actually account for that, even if the Fed did raise rates, they may too hint that this is the last time.
Trade Well
From the Desk of Savant
Good Morning: For several months now we have been expounding on the fear of a World running out of resources especially Energy and posed the idea that this may be part of the reason Gold, Silver, Platinum, Palladium and Copper have all soared so much within recent weeks. This morning the Energy complex is close to setting new monthly highs and since we there are only a few days left in the month of March, that tends to project higher prices in April and possibly all the way through June, in an anticipatory run towards the start of the '06 Hurricane season and the increase that normally accompanies the so called driving season, where trippers and vacationers tend to take to the highways in droves. This year they are already forecasting Gasoline prices could rise as high as $3.00 per gallon and Gasoline futures have been reflecting this. It looks like it's going to be another rough year with potential new highs in Energy, as we enter the danger zone...
The other influence on Energy that could also cause prices to soar is the value of the US Dollar. A few days ago at the peak of the rally, we postulated the idea that the US Dollar could be at a critical turning point that might be the point of no return and from that point forward, the US unit dropped like a stone, rather unexpectedly for some and it is still dropping this morning... Not even a general strike in France can stop the Euro from advancing higher, so far today. This could have a continuing salutary effect on an already soaring Metals sector.
Not to get too carried away with this so far, because we still have to face judgment day at the Fed which could amount to being US Dollar bullish, we have to be prepared for that possibility, as so far we have a potential 3 wave rally in the currencies and if this is to turn into what could become a real bull market, we would need to see the currencies continue to advance strongly or the Dollar continue to break down...
The Equity markets have to deal with the Fed's decision on rates today, so trying to predict the outcome is a bit of a crapshoot and they will have some dampening from higher Energy prices also. However, suffice to say that should the Fed surprise and leave rates unchanged it could have some dramatic consequences for stocks, that in a way the market seems to have been foretelling of late by their bullishness.
The wordage alone from the Fed might actually account for that, even if the Fed did raise rates, they may too hint that this is the last time.
Trade Well
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