If you’ve read for any time at all, you know the issue is oil. The price has declined for so far and for so long, that it is cutting a wide swath thru the entire energy sector, that is going to bring down the deeply indebted firms that cannot produce crude at these prices and service their debt. The result, beginning very soon, perhaps beginning in April, will be more energy firms going bankrupt. In order to try to stave that off, and to survive as long as possible, with the hope of outlasting the low prices, they have to pump all that they can. There are entire nations in that very same boat! It has declined to nearly $39 as I write. It never did get high enough, and at $39, even if it should stabilize here, there is no good reason for any hope for those firms or nations. In this year, a debt-bomb disaster is going to detonate. The lift in oil from the 2/11 low sought to give hope, but it was a pipe-dream instead.
The stock price high of this rally also did not exceed the prior highs of last Summer, Fall or Winter. This is characteristic of a Bear Market, where you will see lower highs, and now, perhaps fairly soon, lower lows. But, first, since large-cap indexes did exceed their 200-day moving averages, we need to see if such levels prove to be any technical support to the declining prices. As volume was low on the way up… it’s even lighter now. If this decline is going to get serious, we will watch to see of downside volume accelerates.
You have a great opportunity to shed some stock, and lighten your holdings. Our index futures are off by about 1/2 of 1% as of 6:15 am EST. And, the losses overseas, in Asia and Europe, generally exceed 1%… because of OIL, and unserviceable debt!
Here’s to your successful investing!
Harold F Crowell