Crude Oil & Interest Rates Keep Crashing

JC Parets
April 20, 2020

This is an intermarket world that we live in. If you think what happens in the commodities and bond market isn't directly tied with what's also happening in the stock market, you've got a lot of homework to do.

You guys who have been following around along time know that we start out every single conversation about the stock market with, "Okay, what are bonds and commodities doing". It starts there. And then we go into the asset in question.

Look at Crude Oil still crashing down to new multi-decade lows:

Here's a closer look. Based on how Oil started out the week, it looks like it's attempting to retest those 1998 lows. A 10-handle in Oil is not out of the question:

From the long side, I don't see any reason to mess with this thing unless it's above 20, or those March lows.

Look how Oil compares to interest rates. What sort of disaster are oil and rates pricing in that stocks are still trying to figure out?

One more chart I wanted to show you was an interesting one comparing shares of Tesla to Crude Oil. Charts simply don't get cleaner than this:

Look at the base, the breakout, the consolidation and then the parabolic rise. Classic.

Anyway, the way I see it, Crude Oil can keep crashing, Rates can continue to collapse, and US Small-cap stocks can still rise in that environment. Of course. That's just not the bet that we're making.

JC

 

Also See:

We're Shorting Small-caps (Apr 16)

Shorting R2K with Options (Apr 17)

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