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“It’s like nitroglycerin for an economy…”
That’s what Jump Point Trader Editor Teeka Tiwari just said about cheap oil. Oil’s price has collapsed from $107.26 per barrel in June 2014 to $46.23 today.
The decline’s pummeled oil producers… including some of the largest names in the S&P 500.
[The S&P 500 index is a basket of the 500 largest companies in the U.S. stock market by market capitalization.]
The oil companies’ poor earnings since the price collapse helped skew the entire index’s earnings numbers lower. But as Teeka keeps reminding his subscribers, it’s only a matter of time before the benefits of cheap oil—which acts as a “tax cut” for the entire global economy—send the markets rocketing higher.
In the two-minute video clip below, “Big T” looks back to a similar 60%-plus drop in oil prices in the early 1980s. It took 12 to 18 months for the benefits of cheap oil to filter into the broad market’s earnings growth… but once it did, the markets exploded to the upside.
Bottom line: We’re approaching an “inflection point” similar to the ’80s. When it hits, the markets will break through to new highs. Mind your risk-management protocols and stay long equities.