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Oil: Still Ready to Rumble


Don't count crude out just yet.


The oil trade has been so powerful it reminds me of Mike Tyson. After initially breaking out, surging crude mowed down everything from the rationale of a slowing economy to changes in consumer habits and became a two-fisted legend not seen since Tyson owned the ring.

Lately, however, I began to wonder if crude was the one that had the great knockout record or maybe was just living off its reputation. You know, I'm wondering if crude is still the 1986 Tyson or the 2006 Tyson.

Completely writing off crude is a serious mistake, just like talking smack to Mike Tyson, even in his current state. As for whether crude is the old Mike or new I would just say to those that want to find out the hard way: Good luck.

Oil spiked 4.49% yesterday and closed at the high of the session. Just like that crude is looking great. Once again, crude was higher, in fact it was up a huge mount and so too were equities. I know some experts would beg to differ, but I wonder when we stop rooting for crude to move lower because black gold has traded in tandem with stocks for years and I think that trend will continue.

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There could be some resistance at $129.00 and then $132.00. The plays include Transocean (RIG), Weatherford (WFT), Schlumberger (SLB) and Halliburton (HAL). Here's the new spin: If the economy is fine and going to get better people will be able to absorb higher gasoline. The large increase in public transportation usage and other consumer adjustments mean people are responding to higher crude prices.

Click to enlarge

Oil wasn't the only area that dazzled yesterday. So did steel stocks and agriculture. The financials were impressive, too.

I like the way Indian stocks acted and of course what got the market off to a hot start were the retailers, which posted fantastic same store sales, not just the discounters. I must say that over the Memorial Day Holiday my wife went to Costco (COST) two days straight and she came back both times empty handed because there were no parking spots. Wal-Mart (WMT) blew away same store estimates, too, and gave hope that stimulus checks were, well, stimulating.

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No positions in stocks mentioned.
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