XOM joins the party – everything gets sold now

Exxon was one of the last ones to join the broad selling-out party. We broke out of a pattern with support at 75, which has a target of 55 now.

Oil broke below the 85/7 support heading for 65 now, which might bring further pressure for the ones who drill but this is also bad news for all alternative energy joints, since the low oil will spoil their business models. Guess that adds to the overall selling out of material stocks with big funds hanging on to the idea that oil goes up to 130-50. Goldman’s call on energy is dead wrong and hedge funds who played that get forced into selling out.

It’s like a death spiral – one thing adds to the next until an exogenous event helps to snap out. Therefore, we need people with common sense and guts – not many of those kind around these days. On the other hand, the SPX is getting close 10 times earnings, which is a healthy level for now. With the commodities dropping so sharply, central banks can and need to cut rates. Libor again at a new high today. The signals are not so good so far from G7 and the final hour sell off can only be stopped by PPT. They say no bids on the floor so if sellers step in it will drop.

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~ by behindthematrix on October 10, 2008.

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