So, what's going to trigger the next big rally in the stock market? How about a massive selloff in the price of oil. Now that Wall Street hedge funds have successfully sucked the small investor into oil stocks, its time to unleash the profit bombs on the little guy.
What's happening right now is the market is dominated by unrestricted trading vehicles like hedge funds. A report came out this morning saying there are now more hedge funds than mutual funds. Since hedge fund managers only make money from the funds profits, they will sell where there are profits. The money they have made came from owning coal, oil services, steel, basic material stocks, and shorting airlines, tech, cyclical, financials.
Soon the trend will reverse itself as the hedge funds take profits and cover shorts. It will be during this bombing run that we will get aggressive with our energy purchases. Once the oil bubble bursts, look for prices to fall below $50 a barrel, possibly as low as $40. Stay turned, hunker down, and keep your eye on Petro-China (PTR).
