Market Comment

Oil and the Economy

October is a jittery market month, and for good reason. The 1987 stock market crash got underway on October 19th. The 1929 crash was launched on October 29th.

Everybody remembers the October crashes, but October offers other surprises.

The pundits are blaming yesterday’s October 15th U.S. market selloff on the three dollar spike in the price of oil. Strange that oil is suddenly a problem after markets rose in lock step with oil as it moved from $12/bbl to over $80/bbl.

Sorry folks, but there’s nothing that spectacular about a three dollar oil price move at this stage. In fact, we are in the midst of the heavy-weight earnings reporting period, and October 15th is often a highly volatile day for both markets and commodities.

What you really need to know, is that spike losses (or gains) that get started on October 15th, are often retraced once the dust settles.