1 Big Day Does Not Break the Trend
Over the past few weeks, I was considering if the dollar strength and slacking oil prices would help to prop up retail spending and GDP here in the U.S in the second half of 2012. However, with Merkel stepping up and supporting the notion of ECB bond buying in the south of Europe and oil surging 9.24%, I paused to wonder if my theory still has traction.
Taking a broader look, I am not interpreting one positive trading session and European rhetoric as a reason to back away from the exisiting trends (dollar strength, oil weakness). This rally really sets up in my mind as a great opportunity to go short oil and equities for the intermediate term. I could see oil falling another 30% in the coming months as the Europeans print away. At some point however it feels like the U.S economy will get a boost from gas prices at or below $3.