Oil Closes Over $100 – A New Record

FEBRUARY 19, 2008: Oil closed above $100 for the first time today sending inflation fears rippling through the markets. The Bank of England may not be cutting rates soon due to inflation worries as well. It was also announced over the weekend that the U.K. will be nationalizing the failed lender Northern Rock, essentially taking on it’s massive sub-prime losses. The Nasdaq fell 0.7% on below average volume.Precious metals, steel, and oil related stocks were strong. These are typically seen as inflation hedges. Retail and finance stocks were among the weakest groups. Mechel Oao Steel was up 10%, fertilizer maker Mosaic advanced 6%, and leading gold miner broke out of a triangle formation and shot up 6%. Chinese solar Yingli Green Energy lost 8%, and Bidu.com lost 5% and fell further below its 200-day line. The Nasdaq is now almost 20% off it’s October highs. Stimulus packages, multiple rate cuts, bail-outs, etc. may have brought us a ‘counter-trend’ rally but have failed to change the direction of the markets, which is decidedly down. Counter-trend rallies during corrections are by no means a signal to jump back in the markets. Bear market rallies can be sharp to the upside and come back down even faster. It’s best to wait for a ‘follow-through’ day and see top-rated stocks breaking out of proper bases before committing money to the long side of stocks. Don’t forget that the banking system is in serious trouble, the housing sector is in ‘melt-down’ mode and the consumer feeling the pinch of higher inflation and less access to credit. More info at http://www.goldenticker.com INFLATION CAN BE FUN!

Tags: bank of england, fertilizer stocks, inflation, mechel oao steel, northern rock, oil