Ten years ago, the market was fretting, everyone was worried about "peak oil,” and now the focus is on peak demand. Instead of the world on a collision course of fighting over the last drop of oil, now it seems that we have turned the world upside down and now we are seeing predictions that oil demand will peak. The latest peak demand forecast comes from BP, which is predicting that the demand for oil will peak before 2040.
After the signals from a week ago, Friday markets staged a strong rally week. Our methodologies were able to nail both the high and low. What is more difficult is going to be what comes next. Was it the end of the correction?
Last week was one of those weeks where I was completely dialed in and laid out the roadmap very close to the way it worked out. If only I could do that every week. Of course, it helped to have the aid of the time windows. As you know markets peaked in the 610-day window to the August 2015 bottom, which is the Dow bottom.
The biggest story this week has undoubtedly been the big falls in the stock markets. The Dow Jones Industrial Average index fell by more than 1,000 points for the second time this week on Thursday. Similar sharp declines have been evident in other major global indices. Friday was no different as the major European indices sold off across the board this morning, before bouncing back ahead of the U.S. open.
The markets plunged Monday, with the Dow falling nearly 1,600 points in the largest intraday point decline ever. This "February 2018 market crash" caused us to look back at some of the more recent historical market moves.
The sell-off that followed the positive January employment report on Friday should not have been a surprise. It was the typical market reaction to strong economic news during the early stages (relatively speaking) of a tightening cycle. Positive economic news could be inflationary and push the Federal Reserve into a more aggressive tightening phase.