Crude Oil is yet again the story of the day. WTI broke below 49 early this morning, then made a nice run toward 50, but met stiff resistance at the level, and is now having trouble holding 49 at mid-day. Is there further downside? Possibly.. at least technically. Without a break and hold above 50, prices could hit 46 without further changing the actual picture. Just keep in mind, that as prices drop, so will production. Supplies will stop growing so rapidly should market prices for WTI maintain these levels.
In related news, the US dollar is well off of it’s highs. The DXY lost the 102 handle this morning, and met resistance on the first attempt to regain the spot. Treasuries are soft. The Two year is yielding more than 1.37% in preparation for next week’s rate hike, while the ten year benchmark now gives up about 2.58%
As for stocks, the S&P 500 is relatively flat. Most of the downward pressure is still coming from the Energy space, while Financials (being led by the banks) lead the winners. Health Care has remained resilient today, after an inconsistent showing since the political football started being kicked around in the headlines this week.
How does one survive this environment? I don’t tell anyone what to do, that’s dangerous…. but I am fairly open about what I am doing. I went back into the Energy space today. (Can’t call me yellow.) Is the timing right? Heck, if I knew that, I’d live on a beach somewhere, and talk about baseball all day. I rung the register on part of my tech portfolio (HPE) that stopped helping. That was a sizable holding for us. I had already been flat energy for a few days, which is fortunate. With proceeds from the sales of HPE (excellent trade), and LULU ( not so hot), we put about half of that dough to work. I would suggest nibbling, and leaving some powder dry. I nibbled my way back into SLB (quality, IMHO), and SN (purely speculative). Both are names that I’m comfortable with. We also sold (wrote) some VLO puts that expire tomorrow, so we may end up long that name as well. VLO is a quality name that I am more than Okay owning long term if I have too.
As to HealthCare, it’s tempting, but I’m not biting. If you must, my gut says to stay away from big pharma, and bio-tech. Too much political risk. Medical technology firms seem to be best in class these days.