As you know Gamestop (NYSE: GME) crashed on Tuesday to bring an end to the story of a short squeeze. Last week when it went up to over $400 there was a day in which the DOW got slammed for a 600 point plus drop. Some people somehow were worried that the WallStreetBets herd could bring enough hedge funds down to smash the market, but that wasn’t going to happen.
And now the fear that was there for a few hours last week has passed already forgotten by everyone as if it never happened. As a result, yesterday the VIX fell over 10% to close below 23. It was just over 35 a few days ago. This quick swing down shows how quickly the fear is coming out of the market again.
On Wednesday the price of crude oil closed above $55 for the first time since the March market crash last year and soft commodities also ticked up again. Energy stocks are coming alive and were among the top gainers of the day.
Take a look at this chart of OXY.
It looks like it is lining up for a potential breakout. I don’t own it, I’m just watching it, but one I do own is this Italian energy giant.
Eni S.p.A. is an Italian multinational oil and gas company headquartered in Rome. Considered one of the seven “supermajor” oil companies in the world, it has operations in 66 countries and its stock is currently paying a 10.46% dividend.
Rising oil and commodity prices also help shipping stocks, which appear to be in the process of coming out of a stage one base. One shipping stock I own is SFL corporation, which is paying an 8% dividend.
It will be interesting to see if this stock breaks out to the upside in the next few weeks.
Rising energy and commodity prices are going to eventually lead to inflation. In fact most Americans believe inflation is now coming. That’s according to a survey done by the Federal Reserve.
I believe this is part of the reason why we are likely seeing a secular low being put in bond yields, which in time will impact everything. I did an important piece on this yesterday you can find here.
Dave Skarica also did an interview with Jim Goddard of www.howestreet.com you can find here.
-Mike
