BETTER TRADING THROUGH WISHFUL THINKING

The absurdists are attaching the early morning rally in crude oil to Alcoa earnings. Nothing could be more absurd! What in the world does the earnings of a metal fabricator have to do with oil? Absolutely nothing! We have battled against this fractured logic for a year now.

Participants in all financial markets look for an edge, and this is why these seeming correlations pop up from time to time. Using them as a trading tool condemns the user to eventually getting the legs chopped out from underneath them, because as we have pointed out before; THERE IS NO CAUSAL EFFECT BETWEEN MOVEMENTS IN EQUITIES AND OIL!

Changes in prices carry all the information necessary for tactical trading, which is what intraday directional shifts are all about anyway. Movements in oil attached to equities markets should be looked at as opportunities to trade in the opposite direction. There is nagging unemployment, sluggish industrial production, and almost zero money supply growth. Draw you own conclusion.

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