Thursday, January 7, 2010

Market Review...Pre-Jobs Report

Two events happened today that had a direct influence on crude oil's direction.

China Raises Key Interbank Rate
China's central bank unexpectedly raised a key interbank market interest rate Thursday for the first time in nearly five months, signaling a change in its policy focus toward pre-empting inflation risks in the new year. >>READ STORY

Jeff Rubin's Oil Rally Predictor Jumps to $100 per Barrel This Year
Jeff Rubin, is a Canadian economist and author and former chief economist at CIBC World Markets. >>READ STORY

I've been citing the breakout in crude oil ($WTIC) for a few months now and yesterday 'officially' called for a oil rally! I've also writen on this blog that once oil broke out; it would rapidly run to $90...and my target is $105 per barrel. I would say that the rate rise in China, maybe a proactive move to the US possibly raising rates. Tomorrow's Jobs Report is a pivotal event in the Fed's decision. Everyone calling for no rate increase...I'm sorry everyone cannot be correct. My belief has been and remains that as global economies recover, energy demands will increase...thus.. higher oil prices. Now, I've used the charts and the gold lag period to backup my call, that said... expect the next week or so to be volatile for the dollar as well as oil, gold and commodity trades. It will be a tug-of-war as both camps sort out their differences..higher rates or growing energy demand. You could see the counter trade change, if expectations of higher inflation take hold, we could have a rising dollar as well as higher commodtiy prices.
Just looking over the Itz Pix Portfolio, the gainers today were healthcare ABT & UNH plus financials JPM & LNC. Technology and commodities were down today.
I've posted a chart of the Volatility Index ($VIX)...the media's been talking about how the "market is complacent" and the VIX is under 20! So???
You tell me...should you sell?

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