Geopolitics Back in Oil Price?

 | Dec 28, 2011 | 11:13 AM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:






Exogenous factors happening away from the usual European woes? We're not rallying in the face of the obviously successful trade for European banks to borrow from the ECB and buy short-term Italian paper for a risk-free gain. So what else could be going on?

I think there's something out there that's got the averages stalled and that's the higher price of oil without the higher price of oil-related stocks. The rally over $101 wasn't accompanied by the usual two-point jump in Schlumberger (SLB) and five-point catapult in EOG (EOG), the two Mexican jumping beans out there.

Could it be that we are getting close to something in the Middle East that causes oil to spike instead of natural demand, which would then lead to some sort of slowing of the economy? Is that why the soft goods stocks are up again?

Can't be definitive. Can't say, well if that is the case, how about gold? Why isn't it soaring? Can't say, well wait a second, is this the market figuring out demand destruction ahead of an incident with Iran?

All I can tell you is that the times I have seen oil go up without the stocks going up are few and far between and they tend to be associated with blockades and sabre-rattling that could lead to something else.

Otherwise SLB should be at its high and EOG should be at $125. Who knows how high hedge-fund trading card National Oilwell Varco (NOV) would be!

The only saving grace to this negative geopolitical thesis is that lots of retailers are still on the march higher.

But if oil goes north of $102-103 and the oil stocks go down, the diversion will be an obvious one and others will draw geopolitical conclusions that would put a lid on the market until the global situation has calmed down, or at least has more clarity.

Random musings: Lots of chatter about what to do with Sears (SHLD). Close observers know I used to like the stock, but abandoned ship about 70 points ago. I will say this, spirals in retail happen fast, not slowly, when vendors sense they might not be paid. Right now Sears has plenty of cash on hand. Let's see what happens after they pay for their holiday inventory, but I am sure we will hear all about untapped credit lines and all is well. They have to hope the big-ticket sellers (TVs, fridges, lawn mowers, etc.) believe them.

Columnist Conversations

View Chart »  View in New Window »
this chart is showing great bullish signs here, we like this to take out the old high shortly. ...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.