Beware The Oil Signals

[inthemoneystocks]

As the rally in September has been impressive and gigantic, one thing is concerning. Oil has not rallied much, especially considering the drop in the dollar. The United States Oil Fund LP (ETF) (NYSE:USO) is only up 3-5% from the recent lows while the S&P 500 is higher by around 10%. In addition, the dollar has dropped substantially which should strengthen oil as well. This has not happened. Oil is one of the major economic leading indicators as any uptick in the global growth story, creates a rise in oil as future demand increases.

While this massive rally has turned even the strongest bears into bulls, the media giddy and the retail investing is once again putting their hard earned money into the markets, I remain skeptical. Oil should be soaring much more than it is if this rally is truly based one an economic shift to recovery and momentum.

Gareth Soloway
Chief Market Strategist

[Edward Hay]

Interesting. Mining stocks and gold are still soaring. It is unusual that oil has not kept pace despite a lot of good news for the industry recently. I wonder if the unusual height of some other commodities might be skewing this data.

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Mining stocks