Stocks traded higher after it was determined that the latest trade barbs with China were no big deal. The Dow closed 184 points higher at 26,246. Trading volume was up significantly. Both IBD and BTS indicators are positive and economic fundamentals remain strong. BTS noted that market volatility is on the decline which can be a paradox because periods of market calm sow the seeds of increased volatility as traders must take on more option positions to hedge risk.
Tesla is sure having an interesting year. While it seems a new Model 3 is now coming off the line every 65 seconds, the focus has turned to that lovable crazy pioneering CEO Elon Musk. Elon has tweeted out flaming comments on various topics and shareholders are paying for the fallout as short sellers push the negative narrative to drive the stock lower. Elon’s current issues stem from his comments to take the company public and the US Justice Department is now asking for comments. Elon is also being sued by the British cave diver who rescued the “yoot” soccer team. Apparently those two do not see eye to eye and the result is that some lawyers will have a bountiful Christmas. While all this drama surrounding Elon plays out there have been rumblings from sources like CleanTechnica that Tesla’s production problems could be a thing of the past and there could be significant improvement in upcoming quarterly financial results. Time will tell what happens but the story is certainly thrilling to watch.
WTI crude oil moved up to the $70 level rising 1.3% after OPEC indicated it would not be raising output. On a global basis there is a current production deficit of approximately 500,000 barrels per day. Production in the US is rising but falling in other parts of the globe. A significant event happening in 2019 however could act as upside catalyst for oil prices when UN mandated clean fuel standards for ocean going ships kick in. Currently there are about 60,000 ships that ply international waters and by 2020 these will need to reduce their sulfur levels in fuel from 3.5% to 0.5%. According to Morgan Stanley this could add upwards of 4 million barrels per day to the demand side as shippers will need to use quality fuel instead of the low-grade bunker sludge currently in use.