Rally Time?

Published January 14

In yesterday’s market report, I noted my view that the relationship between oil and stocks should be near crescendo as stock valuations shore up on their price decline. I indicated that another poor oil inventory report should only have a short-lived impact on stocks at this point, and that a rally was possible. In fact, yesterday’s disappointing data could not even hold oil down, as today we see both oil and stocks on the rise. Stocks seem to be seeking traction now toward a rally, and I believe they will find it for a few good reasons. Investors want to own their favorite ideas at these discounted levels into their earnings reports. Next week presents its own challenge, namely Iranian oil, but I think we could swiftly recover 3-5% from Wednesday’s oversold close of $188.83 in the SPDR S&P 500 (NYSE: SPY) nonetheless. The Iranian oil flow issue is greatly priced in now, and could bring about a buy the fact type of event for oil and stocks when it actually reaches market. I see the SPDR S&P 500 (NYSE: SPY) worth the risk here. Also, hedges against the market are becoming weighty and will cause drag to performance near-term; thus, they can be reduced or removed for now. See more on if stocks are finding traction toward rally time.

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