Random Roger, following up on the 300-point rally meme, agrees that during bear markets, there does tend to be more volatility. Remember, volatility doesn’t necessarily equal whatever is happening (or not happening) in the VIX. And more importantly, volatility doesn’t equal large-size selloffs – monster one-day rallies are constitutive of volatility, too!
Adam has had enough of people deriving some major magical causal link between the price of crude and equity rallies. We couldn’t agree more – oil-related stories are…
Ryanair (RYAAY) is down about 25% today after it warned that it would miss expectations for Q1 and would probably post a loss for 2008. The reason? They deliberately refused to hedge their exposure to oil prices…
Ryanair said last year that it would not hedge against the rising cost of oil last year, unless fuel prices fell below $100 a barrel.
…oh, until now, that is:
However on Monday, O’Leary said the airline was now hedged 90.0%…
The inverse relationship between oil prices and equity markets still seems intact: as crude has sold off over the past week, markets have lifted, and some analysts have even tried charting an hour-by-hour mapping of the correlation. While we’re long-term bullish on oil (how could anyone not be?), we don’t anticipate an immediate or intense turn around in crude prices. At the same time, while the price of oil could certainly drift a bit lower, we don’t foresee any catalysts…
For mental health reasons, we hardly ever watch CNBC anymore. But glancing at it this afternoon, at one point we saw three separate live graphics displaying the price of crude oil. So much screen space was taken up by live oil trackers, there wasn’t enough space left to show the chart of whatever alternative energy company they were pumping.
Was oil making a new high today? Did the U.S. unilaterally attack another country? Did someone accidentally double-park in the Strait…
Yesterday seemed to mark some significant sector rotation, and while the overall commodity and energy stories are fundamentally intact, the intense price action may be moderating here, presenting a good opportunity to collect some premium.
The Thesis
The trend in energy seems to have stalled. We’re seeing confirmation on the technical side as the Average Directional Index on the XLE daily chart turns down. A falling ADX reading suggests that any existing trend is moderating and that price action…
Sunday, August 10, 2008
1 Comment