The crudeness of the market continues. This time it's the recognition that while oil hit a low of $35, the big major oils as well as the large independents failed to do so. They led oil down four months ago, and now they seem to be leading it up.
We know that if the Saudis want oil lower, they have the spare capacity no one knew they had to be able to take oil even lower. There are vague hopes that it needs oil to stay at these prices because they are where ISIS is sapped -- much of their money still depends on oil -- while the Saudis can still pay their bills for the hot war in Yemen. Saudi Arabia continues to buy arms from Lockheed (LMT), with a big contract announced last night -- and the marginal producers globally are priced out. (Lockheed is part of TheStreet's Action Alerts PLUS portfolio.)
One look at how Exxon (XOM) and Chevron (CVX) are acting -- they were so much lower when oil was higher -- tells you that they the $30s level may be temporary. We have been fooled before by the action in these stocks, but it does feel different this time because the action is insanely positive vs. where oil is.
In the meantime, of course, oil going up means the S&P goes higher -- again, crudeness/Crazy Town.
So the day is a good one, regardless of what happens tomorrow with the Fed. Yes, the few pennies move is that powerful, especially with the financials, as they have been going down for fear that they are loaded with oil debt. It's not true, but as I said yesterday, truth is totally irrelevant at this very moment.
Tomorrow could be a different story where the Fed's statement does control the action.
Right now, though, oil higher, market higher and oil stocks higher still. For the record, if you like Chevron, you should love the two Action Alerts PLUS names more levered to oil: Occidental Petroleum (OXY) and EOG Resources (EOG), both of which we put out memos for yesterday explaining their strength in this environment.