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Trannie Swan Dive to Take Down Crude Oil
Posted By Barry Ritholtz On August 3, 2011 @ 6:00 am In Index/ETFs,Technical Analysis | Comments Disabled
The Dow Transportation Index  was down almost 4 percent Tuesday and if there is any silver lining in the current market turmoil is that Trannies usually lead crude down , which will drop gas prices. The chart below shows the 12.2 percent swan dive in the Dow Transports since July 7th with crude oil barely moving. We’re expecting a catch-up trade to the downside for crude oil in the next few days.
If oil falls, the price of gas falls, which acts as a tax cut for the consumer — the good kind of stimulus! See here  for our gas price sensitivity matrix on consumer budgets. A person who drives 70 miles per day, for example, saves around $1,500 on an annual basis for every $1.00 decline in the price of gasoline. All bets off if the Fed cranks up QE3.
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URL to article: http://www.ritholtz.com/blog/2011/08/trannie-swan-dive-to-take-down-crude-oil/
URLs in this post:
 Dow Transportation Index: http://www2.barchart.com/chart.php?sym=%24DOWT&style=technical&p=DO&d=X&x=71&y=11&sd=&ed=&size=M&log=0&t=BAR&v=0&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump
 Trannies usually lead crude down: http://macromon.wordpress.com/2011/01/06/direction-of-crude-oil-watch-the-trannies/
 here: http://macromon.wordpress.com/2011/03/02/the-tax-on-consumers-of-higher-gas-prices/
 Image: http://macromon.files.wordpress.com/2011/08/trannie-and-crude.jpg
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