I think we're seeing the absolute intended consequences of the Fed's action.
They wanted to knock energy prices down and tame inflation, so we've had a nice little smack right back to the breakout point.
Back in March, April, and May, crude oil traded sideways from the $100-$120 level, roughly, and the move lower took us back to the breakout point, with the bigger move today and yesterday bringing us even lower.
Really, though, this is all about the dollar, and an effort to quell inflation. This is exactly what the Fed intended, and that's what you're seeing in the price today.
Now, if you're wondering when you might see this impact at the pump, I don't have great news for you.
Oil futures and gas prices are not correlated as many people mistakenly believe.
We've traded around the $100/barrel level several times before, but gas prices were nowhere near this level back then.
It's a function of capitalism: oil companies are maximizing their profits, and we're paying more at the pump.
But there's good news on the horizon because it looks like the dollar might top out along with interest rates later this year.
But I don't think the price of gas has peaked, because people will continue to try and maximize the situation.
Wish I had better news, but the reality is that this market is made for capitalists with profit incentives, especially with the wage inflation over the last 3-5 years.
The best thing to do at times like this is not to focus externally on forces you cannot change, but think about your trading and what you need to do to generate more cushion in your accounts.
I like to take advantage of this fear cycle with what I call "the fear trade." I recently taught all about it in an extended seminar. You can view the whole recording here.
Remember, we don't work for the markets, we make the markets work for us.
Best wishes,
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