With investors anxious over the meltdown of some of the biggest and systemically riskiest banks in the world, the “markets” needed some distractions. First, Deutsche Bank rescue rumors started circulating, offering a little hope re our 2178 upside target.
DB is up 7.7% off its lows, and 4.7% since our bottom call, so everything must be okay. If CL and USDJPY cooperate by breaking out of their triangles, it will be.
But, stocks were still slipping. Perhaps investors questioned the DB deal, since Merkel had sworn, the day before, that Germany wouldn’t rescue it. About that time, the EIA crude inventory report was released.
After an initial spike, oil broke down through the bottom of its triangle. I considered pulling the plug on our SPX upside target, but settled for revising it down to 2171.
Then, quite by coincidence (not), the WSJ flashed a headline that the oil ministers meeting in Nigeria had a deal.
“OPEC reached an understanding that a production cut is needed to lift petroleum prices…but, the Cartel will wait until November to finalize a plan to tackle a supply glut that has lasted longer than expected.”
Any formal agreement? No. Firm production limits? No. Timeline? No. The deal is about as solid as a New Year’s resolution to spend more time at the gym or cut back on drinking.
But, the algos love this kind of stuff. CL popped almost 7% off its lows, and SPX went up and tagged 2171 seven minutes before the close. All’s well that ends well. Or is it?
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