markets

Please read my disclaimer before continuing.

The Wall Street Journal’s MarketWatch division has an interesting article on their website over the weekend that is extremely optimistic. Here are a few snippets from this write-up:

“Oil, a commodity that's highly sensitive to the economic cycle, has rebounded about 48% from a February low to just over $50 a barrel even though U.S. demand is running low and stockpiles are near 19-year highs.”

The price of oil last year spiked to all time highs during the summer, and then was driven (heh) lower by demand in the next months. Since then the price/barrel has fluctuated greatly. One thing holds true: the more people commute the more money they have as expendable income. If you don’t have $30 to fill up the gas tank you sure don’t have the same amount to eat at Outback.

Consumer spending is a key indicator of economic growth. Companies see increased revenue when consumers have duckets to shell out. If the company is publically traded company the ask price of their stock will go up proportional to revenue (as long as nothing dramatic happens).

Here is another snippet from the article:

“Gold, embraced when the economic outlook worsens, has toppled to about $868 an ounce from more than $1,000 in late February.”

When folks think they are going to lose money in the stock market, they pull out and travel into more secure, lower yield products such as gold and treasuries. The price of gold and the stock market have a directly inverse relationship.

On the same subject eTrade Financial Company (ETFC) stock has been on my watch list since I first opened an account with them. I’m kicking myself now that I didn’t purchase shares earlier this week; the share price has almost doubled. If eTrade gains value that means they are opening new accounts and receiving fees from the purchase of investment products, circulating new money into the system.

The week that the Dow Jones Industrial Average rose 700 points after hitting 6500 I called the bottom on Facebook, something no economist has had the guts to do. Bottom line is that in my opinion, it is the time to get in if you have the means to do so!