Friday, September 28, 2012

This 100% Gainer is an Immediate Sell or Short: TSO



If tax rates rise and government spending slows next year, the economy is expected to fall into a recession, according to the nonpartisan Congressional Budget Office. Some political pundits insist that Congress and the president will do all they can to avoid a recession, but economic growth is determined by a number of factors and political will alone has never avoided a recession.
Rather that watching Washington for clues about economic growth, traders can watch oil prices. In the past, recessions have been associated with oil price spikes. In the chart below, created at the Federal Reserve's website, the 12-month rate of change (ROC) is shown for oil prices. The gray bars highlight recessions, a standard feature on all charts created with the Fed's data.

Oil Chart
The annual ROC of oil prices has spiked above 80% five times since 1970, and a recession followed four of those spikes. In 2010, however, oil prices rose as the global economy recovered from a deep recession and growth followed the price spike.  (more)

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