ETF Trends
ETF Trends

The nuclear crisis in Japan continues and radiation threatens those already devastated by the earthquake and tsunami.  Crude oil plunged below $100 a barrel, settling at $97.18, the largest one-day percentage drop since October.  Oil-related exchange traded funds (ETFs) followed the oil price, while alternative energy ETFs rose further.

The nuclear crisis has exacerbated worries about the impact of the disaster from the quake and tsunami of last week, reports Jerry A. Dicolo of The Wall Street Journal.  Japan is the world’s third-largest oil importer and there is concern over their diminished demand for oil and other products.  But the demand should eventually return as the country begins to rebuild.  But with the growing nuclear problem, there is too much uncertainty as to when the rebuilding will start and how long it will take to recover.

While commodities fell, investors moved to a safer holding – the U.S. dollar.  The dollar was up nearly 1% against a basket of currencies.  Oil is priced in dollars, thus it tends to fall as the dollar rises.  Protests in the middle east affect the price of oil and there are concerns the unrest can move into bigger producing countries, such as Saudi Arabia.

The uncertainty and turmoil has certainly brought back discussions of alternative energy sources, such as wind and solar energy.  These energy sources seem to be a safe alternative to what we are witnessing in Japan.  The whole world runs on oil, and it could take a long time to replace it.

Investors should not have to predict what the markets will do or what the energy sources will be.  Watch the trends and have a strategy for buying and for selling – one never knows what the future will hold.

For more information on commodity ETFs and their trends, visit our ETF Analyzer.  You can also find more about alternative energy and oil in our categories.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.