Friday, June 10, 2011

Exxon's Warning

No, no - don’t get alarmed. This article has nothing to do with earnings or anything like that. I stopped caring about earnings and other fundamental nonsense years ago. Besides, companies can just make that stuff up anyway. Besides, the stock market cares nothing about earnings and has only moved in recent years based on whatever ‘stimulus’ is coming out of the Federal Reserve. 
It’s short and simple this week. Below is a chart of Exxon. As Exxon goes, so too goes the Dow. The chart of Exxon is a pretty clear head and shoulders pattern that now looks poised to drop the stock price about 10%. Thus, we could make a pretty good bet that the Dow would also drop the same as Exxon. 
The only thing that would likely pull Exxon out of this bearish pattern is a rising oil price. Oil can only rise if the US dollar weakens. Currencies have to weaken relative to one another and they weaken according to whoever has the most idiots in government. Incredibly, it looks like that prize is going to the European Union as they scramble to bailout Greece and everybody that owns credit default swaps tied to Greek debt. So, it looks like this week turned the tables. The Euro is now beginning to turn lower and that means the dollar has to turn up. Oil should then fall taking Exxon and the Dow with it. After all, the result of having the Fed comically try to drive the stock market is the markets switch from valuation to inflation. Inflation is driven by currency and the US currency looks like it might strengthen for a while. Get prepared for a few ugly weeks ahead. Exxon is trying to tells what lies ahead.

YTD - Exxon
Chart courtesy
Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. Advisory services offered through BMF Investments, Inc.

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