In an interview to CNBC-TV18's Maneka Doshi, Rayan Detrick, Chief Strategist, Schaeffer’s Investment spoke about the impact of the Greece crisis on the world economy and on the high oil prices.
He said, "Its slowly turning higher, oil is good sign of the economies growing and can continue expand on and live with higher prices. I do think oil prices will keep turning higher here. Its definitely worried on slowing economy recently."
Here is the verbatim transcript of his comments. Also watch the accompanying video.
Q: Equities rising on the back of some hope that a Greek solution is in sight even though the economic data that came in today was mixed?
A: We obviously are extremely oversold. The S&P is looking like it might be down seven straight weeks here, which is one of the worst streaks since 2000. Nonetheless look at the technicals, the 200 day moving average (DMA) on the S&P 500 is already bottomed yesterday. It is also pretty close to the March lows. So you got two levels there from a technical point of view with the oversoldness. There is a potential for some support and we are getting that bounce today. But like you said we have got some news out of Greece that’s brought some buying early, the confidence was little weak but the leading indicators are good. Nontheless when we bounced lower on Nasdaq we are pretty much virtually flat here, so you have to be a little disappointed with the overall bounce. We have seen this before, last summer we had a sell off of about 17% from the top to the bottom in April to July.
This time we haven’t sold off quite that much, I don’t anticipate that big of a sell off this time but we are at a weak time of the year, the economy is slowing so lot of concern out there. A lot of fear is started to creep back in and we all know when there is a lot of fear it usually helps bottom form. I don’t think we are quite there yet but we are definitely getting closer to a potential washout and get out of the fear. May be finally a good buying opportunity but we are just not quite there yet in my opinion.
Q: A quick word in on oil as well. We have got WTI lower at about USD 93 in trade today. What is it that’s driving oil lower? Is it currency volatility?
A: Yes I do think that its currency volatility. US dollar definitely had a pretty good run here as people have been moving to safety that it possesses and its bouncing higher. If you talk about oil its actually at its lowest levels since February and technically speaking its just above its 200 day moving average like the S&P 500. There is potential of some buyers to step in as it is weakening. The overall reason is not only because of the currency is going on but also just the overall global economy is definitely significantly weak in the last two months. With the overall confidence just so very low and, the demand for oil simply isn’t there.
So one final thing on oil though, when you talk about oil everyone says higher oil is bad. When it goes higher the market goes higher, when it goes lower the market goes lower. If you are bold atleast on US equities specifically you probably wouldn’t want oil to continue to trend higher, you don’t want one of those major spikes higher like we saw in the summer of 2007 right before the major peak. Its slowly turning higher, oil is good sign of the economies growing and can continue expand on and live with higher prices. I do think oil prices will keep turning higher here. Its definitely worried on slowing economy recently.
