Stock Market
I have argued unsuccessfully for several weeks that the market was due for a sharp, short
term pullback. It took the hit today as traders used weaker than expected economic news and
a spike in the oil price to take some profits. The SP 500 has broken below its 10 and 25 day
m/a's, thus signaling a possible and negative change of direction. At this point, it is wise
to pay attention to see how much, if any negative follow through takes place. SP 500 chart.
Oil Price
The oil price started the week with a contra-seasonal price decline, but the shorts moved
quickly today to cover and sent the price up around $4.00 bl. The Arab region is seeing
increasing turmoil and with a weekend ahead, the boyz, fearful of a contagion of turbulence,
decided to even up and await developments. Oil price.
Arab Unrest
It is a region of bad governments and has been for years. Global recession shook sizable
parts of the area, and now rising food prices are straining household budgets. A number
of Arab countries have watched former struggling LDCs like China, India and Brazil
arise and flourish economically, while they have chafed under corrupt regimes which have
shown little interest in providing programs to develop their own economies. Arabs in
countries like Egypt, Tunisia, Algeria and Yemen to name several have realized ever more
clearly that being backwater states need not be their lot in life. So, with Ben Ali having
been chased and people out on the streets to challenge in Egypt and Yemen as well, there
could be revolution in the making, and the capital markets are taking note. As of today, there
are far more questions than answers, and investors and traders need to be careful not to
leap too far forward of the emerging narrative.
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