Equities Rebound Even In The Face Of More Low Oil Pricing As Dollar Forces Down Precious Metals Though Gold Is Down Just A Bit

Crude oil fell again today, losing nearly 1.25% as of 3:30 in New York. One would have thought that would have brought on even more declines in equities, but the opposite was true.

Investors and traders were trying hard to look beyond energy as a serious gravitational drag on stock prices, while still digesting the idea that in a few days we will be living in a different interest rate environment.

Some players are beginning to believe the bottom is near for oil, although we think it has a ways to go. It will not be a straight line down. Regardless of when a change in the direction of energy ‘s momentum begins, it will happen and some are buying in (perhaps prematurely) so as to be properly positioned for the shift. (There are also hopeful bargain hunters.)

The Dow had climbed by more than 200 points earlier today but then ran out of gas (no pun intended) as a reality check was set in motion.

There were some energy-independent sectors winners. Tech in general surged, led by Apple; consumer electronics did well – a given around holidays; and airlines moved up – also holiday driven and looking at very good profits due to rock bottom fuel prices.

Some analysts also said that end-of-year, tax-loss selling of equities was cycling in. Every few days, big losers are dumped and then, once the books are cleared, new stocks are purchased. This creates an undulation in overall index levels.

Equities collectively and individually were trading near their 200-day moving average lows and that added some technical impetus to buying.

A stronger dollar re-emerged as again the notion of the Federal Reserve’s interest rate hike took hold and influenced commodity pricing.

The dollar was up about 0.80% on the day against the euro, though only barely against the yen and British pound.

The dollar/euro action was enough to push gold into negative territory even though interest via regular trading was strong to the buy side. It wasn’t quite enough to fend off the weakness brought on by the dollar.

The entire precious metals complex was off due to dollar robustness. However, palladium was the metal really taken to the woodshed, preparing to finish off around 1.75%.

Wishing you as always, good trading,

Gary Wagner