What started out as a bear market rally in equities back in March, is now in the process of morphing into a full fledged rally. Sidelined money, disgruntled and dismayed that it has missed the bull’s party of the last two months, is now reluctantly piling back into the market.
Some of this money is finding its way onto the NYMEX. The Street has convinced itself the recession is over. Two months ago traders were buying because they wanted to “participate” in the equities rally before the bear market resumed. Today these same traders are spinning a dubious fundamental case because dour economic headlines, which the market receives nearly daily, are less bad. Thus, the crude oil bulls have hitched their wagon to the equities. And, they are going to continue to do so until it stops working for them.
As analyzed in today’s issue of The Schork Report, supplies are high and rising while demand is low and falling – but it just doesn’t matter… you see, the S&P was up yesterday and that is good enough for oil bulls. This market is rising not because of fundamentals. It is rising because it is an asset play.
Stephen Schork is the Editor of, "The Schork Report"and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.