• August 21, 2019

ELAM: Summer Slumber Underway in Markets - Odessa American: Business

e-Edition Subscribe

ELAM: Summer Slumber Underway in Markets

Font Size:
Default font size
Larger font size

Posted: Sunday, June 30, 2019 5:00 am

After May, Go Away

Stock Market Axiom

We may already be in a mild recession.

Economist Gary Shilling

There are numerous studies of historic data regarding the stock market. In most years, investing in November and exiting in May gives a better long-term return than staying through the summer.

With every other economist forecasting rosy scenarios, Shilling lists slower job creation, trade wars, and a ten-year boom probably ending. He sees a mild recession with stock prices retreating 200 points below the late December low.

Last week I mentioned that yes the DJIA hit a new high. But that high was not confirmed by a new high in the Dow Transports. Charles Dow created his two indexes in 1896. The Industrials made goods and the Transports shipped them. Then shipping was primarily rails and steam ship. He postulated that each needed to complement the other, a new high in Industrials was only valid if accompanied by a new high in Transports. One might question that today suggesting the high tech NASD indexes are more important. But as it stands neither the Transports nor the Small Cap Russell 2000 are joining the Industrial party with new highs. This is reason for the Caution Warning issued in this space weeks ago.

Gold has confirmed its new bull market with five waves up from its Augusts 2018 lows. It is now pulling back in corrective fashion.

The ETF proxy for oil prices is USO. USO has rallied right to its 200-day moving average today and looks toppy. Crude prices are right at their 200-day MA as well which is $59.03. I am suggesting lower oil prices lie ahead. The moving averages are converging which usually is the precursor to a change in direction.  The XLE ETF in energy will likely not regain its April high of $68.  XES Energy Service is failing below $10.

Natural gas prices are still low at $2.32.

And now, a comment on Higher Education, which by the way is my day job. We have multiple events including the admissions scandal to elite universities, the promise of debt forgiveness to millennial voters (hey Bernie, I want my PhD tuition at UT Austin refunded if you get in!), and a $44 M judgment against Oberlin University for discrimination against a bakery vendor. And this is happening amidst a higher than ever default rate on $1.5 Trillion in college loans. I suspect we are at a social mood ‘apogee’ (the farthest or highest point) in Higher Education.  Enrolments are likely peaking as alternatives to expensive under and graduate degrees proliferate. You read it here first.


Odessa, TX

Current Conditions

Partly Cloudy
Humidity: 26%
Winds: S at 10mph
Feels Like: 95°

Your Extended Forecast


High 96°/Low 74°
Mix of sun and clouds. Highs in the mid 90s and lows in the mid 70s.


High 96°/Low 73°
Plenty of sun. Highs in the mid 90s and lows in the low 70s.


High 96°/Low 74°
Plenty of sun. Highs in the mid 90s and lows in the mid 70s.
Online Features

Pet Central


Having a pet is a lot of responsibility, and we’ll help by giving you lots of tips and tricks! More >>



Our fitness articles will help teach you how to work out with gym- and home-based exercises. More >>



Enjoy the crosswords challenge in our free daily puzzles, from the harder Sunday crossword to the quicker daily. More >>



Every Sudoku has a unique solution that can be reached logically. Enter numbers into the blank spaces so that each row, column and 3x3 box contains the numbers 1 to 9. More >>

  • ALL-ACCESS: Subscribe to our e-edition and premium website at myoaoa.com.
    You can read your daily newspaper without taking a walk to the driveway.
    Look back at yesterday's newspaper, or issues from months ago with our archive feature.
    Call circulation at 432-337-7670 to sign up today.