Oil prices diverge, megacaps break support

Disclaimer:  Nothing in this blog post or in any other blog post should be construed as personal investment advice.  It's for my own entertainment only.  If you want investment advice, hire a financial advisor.

 

Normally, West Texas Crude and Brent trade within a few bucks per barrel of each other.  In times of supply disruption, though, that difference can widen.  We're seeing that right now.

Early Thursday morning, the spread was about 18 bucks.  It has since narrowed a bit, but it's still wider than usual.  It's currently between 13 and 14 bucks. 

Here's a chart that shows the ratio of the two petroleum products:

 

As you can see, this Iran stuff sent the ratio careening.

So what does this mean in practical terms?  Good question.  A case can be made for both higher oil prices and lower oil prices.  I'm undecided.  The past two times the ratio spiked like this, it was the result of military action--last summer's campaign against Iran and the Russian campaign in early 2022--and the price of oil headed steadily down after the brief spike.  Then again, the oil trade wasn't as imperiled in those conflicts the way it is in this one.  So again, I don't know.

Now let's look at the stock market.

The S&P 500 has broken support.  It closed below its 200-day moving average.  The 50-DMA is still above the 200, so we haven't had a bearish crossover yet, but the breaking of the 200-DMA support line isn't a good omen for the megacaps.  I say "megacaps" because the equal-weight version of the index is performing better and is still above the 200-DMA.

Here's the megacap-concentrated S&P:

 

As you can see, the slow stochastic is in oversold territory, and the RSI is close to being in oversold territory.  Even if we're on the cusp of a new bear market, I wouldn't be surprised to see some consolidation at around this level before heading further down.  And, of course, the index could rebound and head back up as it did the previous times it was oversold.

Here's the equal-weight version:

 

In this index, there's still a bit of room before reaching the 200-DMA.  The oscillators show pretty much the same thing they do in the other one.

Some sectors, such as energy, are currently showing the opposite: they've gone to the moon recently, and they're in overbought, not oversold, territory as indicated by the oscillators.

In summary, I'm not sure where we're going from here, and I suspect a lot of traders are keeping a close eye on geopolitical events for guidance.  As long as there's uncertainty in the Persian Gulf and the global oil market, stocks will probably see some whiplash.

Firefly sequel series?

Well, it's semi-official: Firefly is on the verge of coming back.  All it needs is a network to host the episodes, from what I understand.  (Disclaimer: I'm not in the industry, so I'm not an expert about the process involved in getting a show on the air.)

https://ew.com/firefly-cast-to-reunite-for-animated-series-revival-11926552

At this year's Awesome Con, the actor disclosed that an animated Firefly series is in advanced development at 20th Television Animation, and it will bring the original cast back together. 

It will apparently take place between season one and the movie, so Wash will presumably be in it (which I fully support, even if the new show took place after the movie and they had to retcon him back in).

An animated series is a good idea, I think.  Probably the best way to go given the age of the actors and the desire to bring Wash back.  I agree with the animation decision.

I just hope it doesn't suck.  We all hope it doesn't suck.  Unfortunately, the IP is owned by Disney, and that's not encouraging given their performance in recent years, so we'll have to get lucky on this one.

But whatever happens... you can't take the sky from me!

 

ADDENDUM:  I just had a thought.  You know what would be cool?

Rotoscoping.

That way, the fans who prefer a live action series would essentially get it, but we'd also have the benefits of animation.  Best of both worlds.

I know this will never happen.  No one does rotoscoping anymore.  But a man can dream. 

"t" button no longer works

I'd posted before about how the "t" button on my laptop's keyboard was either not working or it was double-striking.  Well, now the double strikes have ceased.  I just don't get "t" anymore at all.  I have to copy and paste the letter into my writing (like I'm doing now).

I'm going to search the internet and see if it's practical for me to open up my laptop and clean beneath the keys.  I'm hesitant to do such a thing, because you never know if you're going to ruin the device permanently, but this non-functioning-key thing is highly frustrating, and I can only take so much. 

In the meantime, it's supposed to get cold again on Monday.  Temps are going to drop into the twenties, and that should be sufficient to kill off much of the new spring growth.  Ah, well... it was nice knowing you, spring, while you lasted.  :(

Oil cools

Disclaimer:  Nothing in this blog post, or in any other post on this blog, should be construed as personal investment advice.  This is for entertainment only and for my own amusement in particular.  If you want investment advice, hire a financial advisor.

 

After last night's spike to well over a hundred bucks a barrel, oil has pulled back to the mid-eighties.  Since the global economy runs on oil, lower oil prices are good for almost everyone.  This should ease political tensions a little, both domestically--in numerous countries--and internationally.

AI-related stocks rebounded a little from their 2026 selloff, but volume was modest, so I'm not convinced these stocks have bottomed out.  Maybe they have, but the verdict isn't in yet.

On a related note, Henry Johnston has an article worth reading:

https://www.rt.com/news/634271-gold-price-iran-oil/

RT has some absolute garbage editorialists, but Johnston isn't one of them.  On the contrary, if you only read one person at RT, it should be him.  He's one of the sharpest tacks in the drawer.  It's actually quite amazing to find a guy like him at any "newspaper" site anywhere in the world.

I think his analysis in the above article is sound, and I would only add that another reason gold hasn't spiked up in recent days is because it was already overbought and is in its pullback/consolidation phase (as I previously blogged about).  Fundamentals are hugely important, to be sure, but the price action is where the rubber meets the road at any given moment.

So what happens next?  Good question.  Depends on tanker traffic transiting the Strait of Hormuz, and that depends on what the US Navy does and on the "Iranian drone/missile attack" variable.  Until we have a clearer picture of those things, expect volatility in the oil market.  And don't forget China and India, because they have economic interests in Gulf oil, too, and either of them--or both--could make moves that further complicate things.

So if oil is no longer cheap, what commodity is cheap right now?

Steel.  It's been cheap for a year and a half, cheaper than it was during the previous years back to 2017. 

 

 

It looks to have bottomed out, so risk should be minimal.  I bought a steel stock last week and another one today.  It might be a long time before steel makes a move, but you never know--as we just saw with oil--and as long as risk is at a minimum, I can afford to wait.

Well, that opportunity came and went

Disclaimer:  Nothing in this blog post, or in any other post on this blog, should be construed as personal investment advice.  This is for entertainment only and for my own amusement in particular.  If you want investment advice, hire a financial advisor.

 

Six weeks ago, I posted this:

All I know is that the precious metals are not cheap right now, and I won't be buying any time soon.  Oil is cheap, and a few other things are "cheap enough," but I'm not jumping on the gold/silver bandwagon.

Silver had broken $100 per ounce, and gold had broken $5000 per ounce.  Right now, silver is trading at about $81, and gold is at $5066.

The more interesting story  is oil.  Crude was trading at about $61 per barrel six weeks ago.  It's currently around $114.

Now, I didn't foresee this Iran business, so I'm not really as smart as that blog post from January makes me seem.  I didn't think oil would nearly double in six weeks.  The underlying philosophy, though, is sound, and it would have borne fruit like this sooner or later.  That philosophy is this: commodity prices are cyclical.  Buy when the commodity is cheap, not when it's expensive.  Don't chase the current hot thing.  Instead, look at the commodities no one is talking about.  That's where the bargains are.

The longest decade

It's said that there are decades in which nothing happens, and then there are weeks in which decades happen.  I think we're experiencing the latter, and I think we've been experiencing it for the entirety of the 2020s.

Like any good hobbit, I prefer peace and quiet and good tilled earth.  I'm not interested in having adventures.  The 2020s have been... unsettling for me.

For a few years now, I've been thinking about the events of the seventeenth century and about how the twenty-first might turn out to be similar to it when it's all said and done.  History doesn't repeat, but it rhymes, and I think our time will rhyme with that of the 1600s.  At some point, I'll write an essay laying all this out.

In the meantime, there's a lawn to be mowed, bushes and trees to be trimmed, and weeds to be pulled up.  There are new furniture pieces to be constructed from raw wood.  There are songs to be sung and played.  When the world becomes too topsy-turvy for you to stomach, do as I do and build something, or manage some nature, or pick up an instrument.  These things can heal the sickly soul.

Thanks, anonymous promoter!

Someone promoted Clouds of Venus on Monday.  Nice little pop in free downloads.  Don't know who it was, but I'm very appreciative of it.

Thanks, whoever you are!  :D