Oil Advanced By The Greatest Amount Since December

By: Kent Engelke | Capitol Securities

Oil and oil shares surged yesterday as inventories fell for the fifth consecutive week. I will argue the advance was predicated upon electronic based trading. Will crude now advance to the upper part of the 12-month range from its lower boundary?

Perhaps the more appropriate question is how fast will it advance to this range?

I have commented many times about the narrowness of the NASDAQ’s 2017 advance, an advance primarily focused in five stocks, one of which is Apple. Yesterday, the WSJ wrote Apple is up about 33% since the start of the year and up about 66% during the last 12 months. The Journal further reported that its capitalization is greater than the combined capitalization of the 102 smallest S & P 500 companies.


The WSJ further reported the last time one of the 10 largest companies in the S & P 500 had a year to date run greater than Apple’s in 2017 was in 2001 when Microsoft gained 66%.

According to Bloomberg if someone bought Microsoft in May 2001, one would not break even on that trade until October 2013. Wow!

Will history repeat itself? Thirty-two years ago when I entered the brokerage industry, I was schooled growth stocks were typically regarded as the smaller companies trading on the NASDAQ. Today, growth is regarded as the mega capitalized growth technology companies. Is this oxymoronic?

Commenting about yesterday’s market action, aside from oil share, equities were relatively quiet as were Treasuries.

Last night the foreign markets were mixed. London was flat, Paris was down 0.38% and Frankfurt was down 0.25%. China was up 0.29%, Japan was up 0.31% and Hang Sang was up 0.44%.

The Dow should open nominally lower, perhaps the result of the controversy surrounding the firing of Comey. Crude is up another 1.5%. The 10-year is up 3/32 to yield 2.40%.