Chris Lau - Seeking Alpha

Tuesday, August 05, 2008

Further Reading, Part 2.

TSG Stock Market Letter is Another essential newsletter that I have found to be useful in analyzing the stock market. The August 1st newsletter can be summarized as follows, in the context of commodity prices:

  • Oil prices had previously held up because investors wanted to park their money in oil instead of the US Dollar. Now that the US dollar is strengthening, oil prices have begun to unwind.
  • The strong emerging markets is contrary to the performance of these stock indices. As a result, there is a strong likelihood that the demand for oil in these markets is declining or is on the way to decline:

  • Falling CRB Index is good for the DJIA:

Charts taken from:

With oil now trading at a low of $118, it may be possible for energy prices to violate my support target prices. In my posting on July 29th, I had called for additional downside of 11.9%. However, should the sell-off accelerate, I will need to establish new support downside prices for oil.