Chestnuts Roasting And Stockings Full Of Cash

You know those old movies where the bad guys “rub out” someone then toss the bound body onto the street and it ends with a sickening plop?

We’re thinking that right now crude oil, which is down 10% on the week, is that body. Plop, plop, crash, shriek, wham, bam. Crude’s reeling downward is affecting everything else in the marketplace, but it is not exactly the prime mover.

The prime mover is more likely the Federal Reserve’s practically guaranteed interest rate hike that should come in less than a week. Calling the liftoff the prime mover is almost accurate, but what is really a fuller description of the action is more intricate.

We are getting an early “end-of-year” sell off and it makes sense. Let’s take a hypothetical stock called ZYX Corp. ZYX has enjoyed a pretty good year but investors noticed some sluggishness in October and November due to perhaps a slowdown in China, tardiness on the part of the European Central Bank, and a potential rate rise by the Fed back in October.

ZYX has lost some value but still is up 9.00% on the year. Should I, Mr. or Ms. Bigtime Portfolio Manager, hang on to ZTX through this volatile last month of a puzzling year?

Should I hold onto ZYX stock while the Fed hangs back, pretty silent? While the war in Syria and Iraq grows trickier? How about Big time’s thinking as to his or her own personal plans over the holidays, which are less than two weeks away for all intents and purposes?

No one wants to be caught drinking his tenth eggnog while the market oscillates. Very bad for the digestion.

Crude oil is down to the mid $35 per barrel area. We would have to take a close look at the technicals, but as far as fundamentals go, it’s time for a rally because we are nearing the true cost of production + shipping for the two world benchmarks, Bren North Sea and West Texas Intermediate.

A general rule of thumb on watching this spectacle is: WTI leads the market down but Brent leads it up.

The U.S. dollar fell in counterintuitive trading once again. Apparently, all the case is fleeing to other currencies, which seems Pollyanna-ish to us. No matter how one tries to resist, all currency roads lead back to the dollar-euro dance.

The dollar’s stumble – not tumble – added about $3.75 to the value of gold. Regular trading added another $1.25, give or take.

Palladium was up marginally, but platinum was beaten up and, like crude oil and the dead body above, tossed to the curb on the day, down $13.00. Silver joined platinum by the trash heap, down a whopping 19 cents or 1.30%.

Wishing you as always, good trading,