Crude oil prices fell more than 7.5% to $57.20/bbl, and closed at $60.73/bbl (-$0.55)as terrorist attacks in London rocked the financial markets. Most of yesterday's gains in the oil patch were due to the threat of hurricane Dennis' eventual path into the Gulf of Mexico. I live in the panhandle of Florida, and last September we took a direct hit from hurricane Ivan. Since we have yet to recover from the damage of Ivan, no one around here wants anything to do with hurricane Dennis.
I was impressed with the action of the financial markets despite the terrible news coming out of London today. I am holding out hopes that we will have at least one more run to the upside before the market reverts back to its seasonal trend.
This morning the Dow Futures were indicating a low of 10,061 with an actual value of 100 points higher at 10,161. In technical terms, I felt if the Dow could close above that number the market would put on a positive showing. Since the Dow closed at 10,302, I find the markets performance to be very impressive.
Today's newest bubble stocks (homebuilders) continue to put on a stellar performance. I am not sure if normal buying or short covering is driving the homebuilders higher but the sector continues to outperform the broad indexes.
My best guess is the market has until July 15th to impress us. After that, I would be very cautious until September. If you're a trader, you can probably play the upside for a few more days, and them it will be time to play the short side.
Our favorite hedge remains the Rydex Tempest 500 Fund (RYTPX). If you don't already own it, you can dollar cost average into the fund over the next 7-14 days.
If you don't hear from me after Sunday, July 10th, it means hurricane Dennis has arrived. Lord willing, maybe we can avoid this one. Keep us in your prayers.
