Circling the drain

Crude oil rallied midweek and has been on a roll the last couple of weeks, with a plunging dollar and peak demand for gasoline. Circling the drain [Dennis Slothower Photo] By [Dennis Slothower]( Written Saturday, July 22, 2017 Crude oil rallied midweek and has been on a roll the last couple of weeks, with a plunging dollar and peak demand for gasoline around the Fourth of July and vacations. Oil prices moved back above $47 a barrel on Wednesday, following a draw on gasoline inventories for the week, then dipped below by the end of the week. This helped energy stocks to rebound for a while, but they still remain in a bearish downtrend. [70719-XLE]( This is such a bearish chart, especially when you consider how far the U.S. dollar has fallen since the first of the year. Crude oil and energy stocks should have been in a bullish uptrend, so the question is, what happens to this sector if the U.S. dollar rebounds in the second half of 2017? Look for the U.S. dollar to start rebounding soon, and if that happens, oil prices will again start sliding into the fall, taking the stock market down with it. Advertisement How the 1% Make Their Millions... Now Open to the Public Finally, there's a way to "piggyback" Wall Street's biggest, most lucrative deals... all without assuming any of the risk or learning a thing about complex finance. [Click here to learn how.]( Expensive Stock Market [According to Barron’s](, the U.S. stock market is the world’s MOST EXPENSIVE market: The US ranks last among 40 countries and regions based on analysis of different metrics by StarCapital Research. While the US doesn’t place last on any single category, it has the lowest combined average across all of them. stark comparison is to take the P/E ratio and divided it by the current Volatility Index (VIX). [70719-PE-divided-VIX]( What is alarming about this chart is it illustrates how truly expensive the stock market has become relative to perceived risk, as a measure of volatility (VIX). For example, the Russell 2000 index is the weakest of the major market indexes, but its VIX index is at a new all-time low. [70719-Russell-2000-VIX]( Advertisement [A Catastrophic Fault Line Has Formed In The Market]( There’s an underground fissure that’s about to shift, unleashing unimaginable destruction on stocks and perhaps your accounts. While this crack in the markets formed decades ago, several recent events have transpired that could make this crash “the big one” — impacting 99 out of every 100 stocks. Only a few will survive the bloodbath, and those who do will come out richer than ever. If you want to be one of them, [click here to watch this critical video to the very end.]( So there you have it! The most expensive stock market of all stock markets in the world, and historically one of the most expensive ever by many measures, selling at huge premiums of real worth, while people discount or ignore market risk, even as sirens are blaring loudly of an approaching hurricane. Breadth Continues to Shrink The stock market finished mostly flat for the week, as investors were unimpressed with a slew of corporate earnings. Just 6% of small-cap stocks were able to match the index and make new highs yesterday. New highs are not revealing the truth about the underlying breadth of the market. [70720-SP600-small-cap]( What this means, again, is that in each index, fewer and fewer stocks are doing all the work as institutions shun risk, while large-cap weighted companies are being accumulated for their liquidity. The Philly Fed Index fell from 27.6 last month to 19.5. The new orders index fell from 25.9 to just 2.1! Also, the average employee workweek index fell from 20.5 to 3.8, so not the best prospects for the third quarter. Thursday we learned the European Central Bank left key rates unchanged — no surprise there, but Mario Draghi was vague about future asset purchases, suggesting a tightening of financial conditions due to the euro’s recent appreciation. This again puts the spotlight back on the plunging U.S. dollar. Dollar Hovers Over Key Support Since the first of the year, the U.S. dollar has continued to get slammed. On Thursday, the dollar again was hit hard, which has now taken it down to the lows of nearly a year ago in August at 94.08. [70720-LongTermDollar]( Advertisement How to get rich when the market tanks The world is a dangerous place. Trouble is brewing from North Korea to the Netherlands. And the world has never been in such debt. The U.S. owes $20 trillion... and the Federal Reserve is going to make that debt more expensive to pay back. Here’s a secret: the debt will never be paid. [Click here now to find out more.]( At the beginning of the year, the dollar was at a high of 103.82, so it has fallen about 9% this year. This is the Fed’s effort to create inflation by undercutting the U.S. dollar. This is extraordinary given three rate hikes, but we live when at a time when the extraordinary is ordinary, especially when it comes to central banks. Even with undercutting the dollar, the Fed is having a hard time of artificially inducing inflation. [70720-US-future-inflation-gauge]( The Fed knows that jacking up interest rates is going to slow the economy down, which is why it is selling the U.S. dollar, but it is also driving capital into emerging markets and into foreign markets just as foreign currencies are soaring, making foreign goods more expensive. Europe and Japan’s soaring currencies will work against them in the next quarter, but now we are getting close to the bottom of the U.S. dollar trading channel at 92. This is why many analysts are forecasting a bottom soon for the U.S. dollar and a rally in the dollar in the months ahead. We’ll see if this long-term support holds because if it does and the dollar rallies, oil prices will collapse as the weather cools, which is what I expect. The stock market will soon turn its attention to the FOMC meeting next Wednesday. To your wealth, [Dennis Slothower Signature] Dennis Slothower Editor, [Wall Street Underground Profits]( Dennis Slothower has been leading a small but profitable group of investors to some extraordinary profits in both good markets and bad over the course of a 38+ year investment career, starting as a stock broker in 1979. In 2011 Dennis was named the top performer by Hulbert Financial Digest for avoiding the Crash of 2008. Now, he is bringing his extensive experience to the public through [Outsider Club]( and [Wall Street Underground Profits](. For more about Dennis, check out his [editor page](. *Follow Outsider Club on [Facebook]( and [Twitter](. Enjoy reading this article? [Click here]( to like it and receive similar articles to read! Browse Our Archives [Don't Get Hosed by IPOs]( [Why Nevada Pot Dealers Are Freaking Out]( [How to Invest in Quality Private Placements]( [Medical Marijuana Makes Huge Legal Progress]( [Gold & Debt: "Just End the Whole Dang Thing"]( Related Articles [Gold & Debt: "Just End the Whole Dang Thing"]( [How to Invest in Quality Private Placements]( [Why Nevada Pot Dealers Are Freaking Out]( --------------------------------------------------------------- This email was sent to {EMAIL} . It is not our intention to send email to anyone who doesn't want it. If you're not sure why you've received this e-letter, or no longer wish to receive it, you may [unsubscribe here](, and view our privacy policy and information on how to manage your subscription. 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