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The Battle of Supply and Demand, Oil, Gold and the Market

As predicted, and as we wrote about yesterday, oil prices continued to climb in anticipation of an OPEC+ production cut. Reports confirmed today that OPEC+ will cut production by 2 million barrels a day.

The Strategic Petroleum Reserve (SPR), which the Biden administration has tapped to ease gas prices, has dropped to its lowest level since 1984, and scheduled releases will end soon. The continuation of multiple Russian sanctions and the decrease in supply should exert upward pressure on oil prices.

Will the stock market rally this week and be able to shrug off rising oil prices? What do higher energy prices mean for global inflation?

The global energy demand and supply imbalance will take time to resolve and, long-term, more resources must be put towards renewable, nuclear and alternative fuels. On the demand side, the critical element of the European gas plan going into the winter of 2022-2023 is reducing consumption, which is, regrettably, not yet happening. Although some people are optimistic, the reality is that inflation will remain problematic if the European energy crisis and the conflict in Ukraine continue. OPEC+’s production cut has the potential to increase global inflation unintentionally.

The United States Oil ETF (USO) increased on Wednesday to 71.94, which is barely below both its 50-day moving average and 200-day moving average. USO has strong leadership, good momentum and a divergence in Real Motion, all of which indicate higher prices ahead.

Mish writes a mid-week column for CMC Markets and, in her article today, she explains that we are looking for the end of inflation in “all the wrong places.” She covers the Supercycle in commodities and how stagflation is impacting global markets. Mish addresses historical correlations from 1972, 1982 and other pivotal years; her analysis addresses many areas of the commodity cycle, particularly the gold price, gold miners, and the S&P 500. She points out that several commodities tend to start a positive trend shortly after gold starts to outperform the S&P 500.

In this period of historically high inflation, investors are wise to keep an eye on the oil and gold markets.

Is MarketGauge right for you? You can sign up for a free consultation with Rob Quinn, our Chief Strategy Consultant, by clicking here. He’ll help you learn more about Mish’s top-rated risk management trading service.

Mish’s Upcoming Seminars

ChartCon 2022: October 7-8th, Seattle (FULLY VIRTUAL EVENT). Join me and 16 other elite market experts for live trading rooms, fireside chats, and panel discussions. Learn more here.

October 7th 11:15 AM (ET), 8:15 AM (PT) Stock Picking Lightning Round with Mish October 8th 2:00 PM (ET), 11:00 AM (PT) Bulls vs. Bears Debate with Keith and Mish on opposing sides of a trade!

The Money Show: Join me and many wonderful speakers at the Money Show in Orlando, beginning October 30th running thru November 1st; spend Halloween with us!

Trader’s Summit: Mish speaks with Helene Meisler on October 23rd at 12pm ET. Learn more here.

“I grew my money tree and so can you!” – Mish SchneiderGet your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

Mish in the Media

Read Mish’s latest article for CMC Markets, titled “Are We Due Another Supercycle in Miners and Precious Metals?“.

Mish talks hedges and stock picks under the current environment in this appearance on BNN Bloomberg.

Mish says yes to Palantir, no to Bed, Bath and Beyond in this appearance on CNBC Asia.

Mish talks about a few of her picks, going short and why metals are in focus in this appearance on TD Ameritrade.

Mish talks putting your cash to work in this appearance on Business First AM.

Mish and Neil Cavuto discuss Central Bank credibility, US policy and more inflation to come on Fox Business’s Coast to Coast. Unless this is a spectacular bottom, preserving cash is smart.

Mish talks about key averages, yields and commodities on this appearance on Bloomberg TV.

ETF Summary

S&P 500 (SPY): 375 support, 379 resistance. Russell 2000 (IWM): 172.30 support, 176.57 resistance. Dow (DIA): 298 support, 305 resistance. Nasdaq (QQQ): 277 support, 283 resistance. KRE (Regional Banks): 60.30 support, 64.77 resistance. SMH (Semiconductors): 197 support, 210 resistance. IYT (Transportation): 203 support, 211 resistance. IBB (Biotechnology): 119.32 support, 124.25 resistance. XRT (Retail): 58.70 support, 62.75 resistance.

Mish Schneider

Director of Trading Research and Education

Wade Dawson

Portfolio Manager

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