Oil Crashes, but Stocks Rise

It's April 27^th 2020 and an unprecedented time.  The oil markets have collapsed.  The price of oil went negative for the first time ever.  It was something most people thought was a mistake when looking at the charts. I seriously couldn’t believe my eyes when the line dropped below zero and the effects it will have on our economy will be seen for a long time.  Many people are glad to see gas prices drop locally, but the impact may be worse in the long run for the average citizen.  But was this the reason that the stock markets made a rally today?  Was that a needed outlier that was part of the incline in the US stock market?

Most likely the 30% decline in oil did not cause stock markets to rise. Instead finally the Federal Government and many local State Governments are talking about reopening the local economy’s and markets.  This is bringing hope and confidence to the investors.

Across the pond so to speak the markets are possibly going to be opening up as well. France, Italy and even New Zealand are starting to loosen restrictions and bring back their own economy in a small way.  Every little bit helps and if they are able to stay safe and contain the Covid-19 pandemic and increase their economic output they are going to. In times like this the markets are flocculating widely and traders are making lots of profit. Companies like American FX Capital are trading at all time highs and gaining huge percentages on their portfolios.  Not everyone has the foresight of a market research company though and we are riding the ups and downs with a little less clarity.

It seems that the local talk from different states governors about how to loosen the social distancing restrictions has given some confidence to traders.  Many of the strictest states like Michigan, Virginia and New York are finally discussing a solution to the problem and are working on getting the many small businesses back to work.  At this point it seems like many of the states are simply waiting on another state to make the first move.  Everyone wants to track the data of how effective the loosening measures are going to be and if they will end up flooding the hospitals to past capacity.  It is a game of chicken and the citizens' lives are at stake. As per the normal we are only talking about the market as we see it and not giving financial advice.  Please see your local broker, investment firm, or attorney for financial advice.