My concern is in regards to the stock market and oil correlation.
I can understand that the price movement in oil affects the overall market, but these days people are attributing all of the daily movement in the market to oil.
What happened to the constant write downs and other big factors happening in the market? Examples include : AIG reports a 5.4 Billion loss, Freddie Mac reports another expected big loss, jobless claims rise, and inflation creeps up.
Furthermore, oil has been creating mini-rallies which is just another method for Wall Street to cover its losses. Therefore, don’t be caught buying all these stocks that have not support at these inflated prices.
The Media has been trying to convey the image that “The Worst is Over”, yet that does not seem to be the truth at all. What you should expect is more and more write downs from big banks and more losses from major stocks. What this all means is that the market is still in a negative ground and could easily swing downwards. So do not follow the current mainstream advice of “BUY BUY BUY”. Be cautious and try to short stocks that are probably expected to report losses due to the credit crisis affecting them.
And remember, this credit crisis is far away from being done and will affect many more stocks in a negative manner.
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