Wednesday, May 21, 2008

Oil passes 130 sending stocks lower

Oil finally passed 130, sending stocks lower. Dow is down 90, but advancers are ahead of decliners almost 3-2 & NAZ is down 5. Jun oil closed out yesterday at 129.07, today the July contract is the near term contract trading at 129.35. Just last week, I mentioned some traders were buying calls for oil with strike prices of 125 & 130. Those guys are happy campers today! The Energy Dept report said oil inventories fell by more than 5MM barrels, analysts had expected a modest increase. Gas at the pump inched up to almost 3.81 yesterday. High price oil is hurting airlines, transportations, housing, credit card business, & on & on. But energy stocks are doing well & that enthusiasm is bleeding over into the MLP sector as that index is now over 300.

Meanwhile Hewlett-Packard (HPQ), a Dow stock, is down 95¢ after yesterday's earnings & conference call. Time Warner (TWX) has finally decided to split off it's cable unit which will result in a $9B div, everybody is guessing what they will use that money for. Oil prices swings are going to dominate news influencing the markets for awhile. Financials, like BAC shown on the right table, continue very weak.

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