The Oil Indicator

DYI:  Oil prices as measured from a year ago are now up 30%; the days of the oil reflation trade are now behind us as this indicator will soon move to the negative.  Oil prices [ANS West Coast] on 1-20-16 were at a low point at $26.23.  If oil prices remain at this level($54.28) DYI's oil indicator will be flashing negative[up 107% rounded].

The stock market is on borrowed time for Mr. Market will have his way as valuations regress back and overshoot the mean.

The Great Wait Continues

  

The Oil Indicator

12/12/16
Updated Monthly

Oil Prices: 
11/30/15....$41.50

12/12/16....$54.28   

UP 30.80%
(oil prices approximately one year earlier due to weekends & holidays)
ANS West Coast prices   

 OIL INDICATOR  POSITIVE

Oil prices are well known for their volatility in the short term, longer term due to dwindling reserves energy prices are in a secular bull market.  Technologies such as fracking will extend the life of oil fields but major new discoveries arrive at a snails pace far slower than the world's growth.  

As long as prices rise in a slow and orderly pace our economy can adjust to those changes, however if prices spike (international tensions, war etc.) high energy costs behave as a massive deflationary tax. This will send our economy tumbling down and very possibly the U.S. stock market.

If oil prices rise greater than 75% from one year earlier, investors at that time should shift their portfolio geared towards deflationary times.  This would be an oil indicator as negative.

If oil prices rise from one year-earlier less than 10% or drop then the inflationary play is in effect; a positive for economic growth along with possible higher stock prices.

Where to find one year-earlier oil prices?  Alaska Department of Revenue    

Oil indicator positive                 
20%  REIT's
20%  Energy
20%  P.M.'s
40%  Small Caps
  0%  Lt. Gov't Bonds

Oil indicator negative
  5%  REIT's
10%  Energy
10%  P.M's
10%  Small Caps
65%  Lt. Gov't Bonds

Vanguard Funds

REIT's
REIT Index Admiral  VGSLX

Energy
Energy Fund  VGENX

Precious Metals (P.M.'s)
Precious Metals and Mining Fund  VGPMX

Small Caps
Small Cap Value Index Admiral  VSIAX

Long Term Government Bonds
Long-Term Government Bond Index Admiral  VLGSX

Disclaimer

This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

DYI