Crude Oil Goes Boom… and 4 Other Thoughts on Today’s Action


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1) Crude Rips

Crude oil is slamming above $43 on an International Energy Agency report saying the market will continue to rebalance as demand from refiners grow.

Predictably, energy stocks (especially oil service names) are doing great work on the upside, and it's also pulling up high-yield (HYG).

The bull run off post-Brexit lows may ‘feel' long in the tooth, but strong crude oil could help extend it.

2) If You're a True Believer…

If you think oil's going to continue running higher, look at energy closed-end funds.

They are still showing large discounts, which could close if oil prices rise.

Names to watch include KMF, KYE, and GMZ.

3) ANOTHER Record High?

Assuming crude oil can keep moving higher, SPX may be in for yet another record high today.

A colleague commented today that since the market's so high, it's probably destined to crash soon.

I'm technically short the market, but I fully understand the reality on the ground: what goes up must come down — but before it comes down, it may go up. A lot.

4) Still No Vol

The VIX had a 13% spike from Tuesday's low to Wednesday's high, but it's round-tripped most of the move.

I popped in a daily chart of the VIX vs. 20-day realized volatility on the SPX:

Both are at yearly lows as the sideways grind continues. Unless something drastic happens, we're going on 24 days without a 1% move.

I really should have gone on vacation this week because the action is so boring!

5) Bio-Blah

Biotech is up a little but it's still showing pretty anemic action overall.

It's partly good old-fashioned consolidation after a big run higher, but it could also be a sign of exhaustion.

If IBB starts surging towards $300, I imagine it would give the bears quite a scare.

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