These potholes need to be navigated before Santa rally kicks in
Then again, they may not ever come to a deal and oil can keep declining which it likes to do this time of year anyway. But it bounced in the Sunday night action. Here’s the chart since the election. Its only when we put multiple pitchforks can we see the Jetstream. The uptrend has been broken but right now they are holding onto what could develop into a sideways pattern. It should run into trouble by the time it gets to 48 and the low does not have a firm square out or any other calculation I really like. So, the risk ends up being to the downside. After you look at this chart, it’s no wonder I can’t make up my mind as to whether you buy or sell the rumor or news right here. But clearly it is responding to that blue channel line which is now causing a lot of uncertainty.
Going through the various sectors, the stock market looks good, even the oil sector didn’t get hit too hard and biotech is holding its own. If there is really anything to complain about, it would be in Europe where the FTSE has been lagging lately. The FTSE did so well for so long it’s hard to fathom but then again, perhaps markets have finally figured out they need to be on the nationalist side of the fight against the globalists.
The next big news event after OPEC comes next Sunday when the Italians go to the polls in a referendum which will eventually decide if Italy decides on having its own Trump candidate. It took Italian Prime Minister Renzi two years for constitutional reform to get thru their parliament and put to public vote when it failed to win a two-thirds majority in parliament. Trump’s victory increases the likelihood the reform will be rejected by the voters. The politics of the situation is such that Renzi has staked his career on it passing. But if it fails, it opens the door for the anti-establishment Five Star Movement which seeks a "no vote" to remove Renzi from office. The Five Star Movement was founded by Beppe Grillo, a popular comedian and blogger in Italy. He is considered to be the Trump type outsider figure in Italy. So, that drama approaches exactly a week from now. I believe the constitutional reforms of Prime Minister Renzi has a very good chance of losing.
While world markets look better than they have in a while, there are all kinds of potholes that need to be navigated before the Santa rally kicks in this year.