Crude Oil was the major influence on market direction yesterday as it powered through the $102/barrel barrier and closed above it.
Crude’s move was the result of reports that unrest continued in Libya and the Middle East in general. Supporting upward momentum were news that almost all of Libya’s daily oil production was halted and that Gaddafi continued his assault on rebels in a major oil center.
While the month of February ended on an up note, the month March started on a downer, as various events combined to knock the major indexes off their lofty levels with almost non-existent rally attempts.
Red was the dominant color on most computer screens. Bucking the trend were precious metals, commodities and oil, which topped the $100/barrel mark causing fears that the economic recovery might enter stall mode.
What a difference a week makes. Last Tuesday, the markets retreated sharply and now, 5 trading days later, decent economic news, sliding oil prices and hopes of a quick Libyan resolution pushed the major indexes higher.
Providing the necessary ammunition to reverse yesterday’s mid-day sell off were decent reports on consumer spending and manufacturing. Adding to the bullish mood were Warren Buffett’s comments that he’s on the prowl for some new acquisitions this year.
One of the terms you hear frequently when reading about commodity ETFs, is the word “contango.”
To enhance your understanding of what it means and how it affects ETFs, here are some highlights from “Contango and ETFs: What It Is, What You Can Do About It:”
Investors love commodity exchange traded funds (ETFs), and with good reason. Aside from the usual benefits that ETFs offer, commodity funds deliver
While I don’t agree very often with Paul Farrell, he did have some interesting thoughts in “Market Crash 2011: It will hit by Christmas.” Here are a few highlights:
Our brains never learned 2008’s lessons, will fail again in 2011
Remember, we can’t help it. Our brains are defective, biased, manipulated by unseen forces 93% of the time. So blame all the lies, lying and liars on our brain wiring. A perfect excuse. Sure, political dogma and insatiable greed factor into our bizarre mental equations. But your brain is as susceptible to the “great con” as Ben Bernanke, Henry Paulson, Bernie Madoff.
Several readers have emailed wanting me to talk about bond funds/ETFs in this current market environment. Here’s one request:
Would you please share your thoughts on investing in bond funds/ETFs? Several articles talk about the possibility of raising interest rates resulting in a drop in bond prices.
Would you recommend keeping the bond portion of the portfolio in money market or CDs?
I realize that you do not talk about bonds much. So, I will not be surprised if you do not want to respond to this.