(Wall St Journal-MarketBeat Blog) Crude $200″ could be to 2008 what “Dow 14000″ (or “Dow 36000,” if you will) was to the year 2000 — the target that distracted Wall Street while a speculative bubble was getting ready to pop.
During the boom, energy and materials stocks became arguably the most important sectors in the market. Charts of commodity stocks show that the bull market in the sector, which dates to 2002, has reversed,lending credence to the idea that a speculative bubble is bursting. As Tobias Levkovich, chief equity strategist at Citi said recently: “Just because (commodity) stocks have fallen 30% doesn’t mean they can’t fall another 30%.”
“We don’t know where the floor is,” said Michael Darda, an economist with MKM Partners. Given the popularity of commodities with hedge funds and other “fast money,” there could be more “explosive” selloffs to come, he added.
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