Stocks and Oil

Jack Crooks takes a closer look at the stock market and crude oil. Mr. Crooks discusses how both of these markets affect the dollar.

Two markets that reflect risk are the stock market and crude oil. The stock market because it's the quintessential risk asset class. And crude because higher prices threaten economic growth and add to inflation expectations.

Both of these markets can greatly affect the U.S. dollar. Mr. Crooks further explains what this risk correlation means for the dollar going forward.

The dollar, more than any other currency lately, has been the one most negatively impacted by market risks such as deterioration in the credit market or trouble for the U.S. economy. This ebbing and flowing of market risk can be seen by observing the price action in the stock market. In fact, the dollar and stocks are now moving in lock step. When stocks go up, the dollar goes up. But that also means when the stock market goes down, the dollar is likely to do the same. And the stock market is now at a critical juncture. The Dow Transport Average recently made a new high. However, this high was not confirmed by a new high in the Dow Industrials. This is what is called a Dow Theory non-confirmation setup. It appears the Dow Industrials could be turning down in a big way.

Should the stock market break down, investors will get nervous again. And that could mean bad things for the dollar. It likely means the dollar will test its old lows. What's more, the recent action in crude oil seems to agree with that scenario. When oil goes up, the buck goes down.

Many of the so-called experts didn't think it would go this high. But yesterday, Crooks ran the numbers on the movement of crude since May 2000, and here's what he found:

- First, in dollar terms, crude has jumped 330% in price since 2000.

- Second, in euro terms, it's up just 155%.

- Third, in terms of gold, crude oil has only gone up 35% since 2000. The numbers show that it now takes 0.140 ounces of gold to buy one barrel of oil, whereas it only took 0.104 ounces back in 2000.

"This means that people holding dollars have felt the spike in oil far more than people holding euros or gold. So, if this trend continues in commodities and the stock market breaks down, new lows in the dollar cannot be ruled out," Crooks states.

To read this issue online, please visit:

http://www.moneyandmarkets.com/Issues.aspxNewsletterEntryId=1813

About JACK CROOKS & MONEY AND MARKETS

John (Jack) Crooks is the founder and president of Black Swan Capital, an independent advisory firm specializing in foreign exchange and currency markets investing for retail and institutional clients. A seasoned financial advisory with nearly 20 years of investment experience, Mr. Crooks uses both quantitative and qualitative approaches to determine the fundamental driving force(s) behind the movement of the currency, capital, and commodities markets. He is the editor of Weiss Research's latest investment offerings, World Currency Alert and World Currency Options, which were launched in August 2007.

Mr. Crooks also founded Ross International Asset Management, a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. Previously, he was general manager of Plexus Trading, where he specialized in currency futures and commodities trading. During his successful career, Mr. Crooks served as chief currency and futures strategist of M2 Futures Inc., an investment boutique headquartered in Chicago, as well as vice president of Global Strategic Research for an international investment boutique, where he was responsible for providing daily advice and global strategy analysis.

Prior to entering the investment arena, Mr. Crooks held various corporate finance positions. He has written extensively on the subject of global currencies and international economics and has been published in Asian Times, Futures Magazine, Barron's, Bloomberg, Dow Jones Newswire, and across many financial websites. He has also appeared on Bloomberg TV and CNBC.

Mr. Crooks holds a bachelor's degree in finance from Florida State University and a master's in business administration from the University of North Texas.

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.

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