Oil Price Rally to End the Market’s Bull Run?

By Murray Dawes, Saturday, 06 April 2024

Geopolitical tensions spark oil price rally.

In today’s Fat Tail Daily, As geopolitical tensions rise, oil prices have jumped sharply and could head a lot higher. Inflation expectations could rise as a result which would place downward pressure on bonds and stocks. In today’s Closing Bell video Murray analyses brent crude oil, US 10-year bond yields and the S&P 500.

Oil prices are marching higher as geopolitical risks rise.

Spikes in the price of oil and gold on the back of geopolitical risks are usually reversed within weeks when nothing much happens.

That may be the case this time around, but the technical situation in oil prices is explosive.

I make the case in today’s Closing Bell video that brent crude oil prices could spike towards US$107 if resistance at US$96 gives way (current price is US$91).

That could feed into heightened inflation expectations down the track, which could hurt bond and stock prices.

US stocks remain in a strong uptrend so it will take plenty of downside volatility to threaten the positive momentum. But as the rally continues heading higher, there are resistance zones that investors should be aware of, which I point out in the video above.

As long as US 10-year bond yields remain below 4.40%, there is reason to remain bullish on bonds, but above there we could see a spike in yields towards 4.70–4.90%, which would place some pressure on stock prices.

Regards,

Murray Dawes Signature

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

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Murray Dawes is our resident expert trader and portfolio manager. He is a former Sydney Futures Exchange floor trader who went on to design custom trading systems and strategies for ultra-wealthy clients (including one of Australia’s richest families). Today, his mission is to help ordinary Aussie investors make profitable investments, while expertly managing risk.

He uses his proprietary system for his more conversative and longer-term-focused service Retirement Trader…and then applies the same system to the ultra-speculative end of the Australian market in Fat Tail Microcaps (this service is strictly limited and via invitation only).

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All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.