Sep

13

Big Contango, from Sushil Kedia

September 13, 2007 |

Big contango: big bullish move ahead! That's an old speculators' principle on Dalal Street. Essentially if the market witnesses high contangos it reflects that speculative demand for stocks is continuing to either persist or is being forced at higher costs of financing. If prices of the securitiy/stock continue to remain firm despite a high contango (read: high cost of speculation) it reflects larger bullishness ahead.
 
Similarly this time round oil has hit a new high and the blogs, yet the print and broadcast press have, to my eyes and ears, not given this event the usual high decibel attention. Is it a reflection that finally the world is willing to accept that in growing economies a higher energy bill is less a worry, but more a proof of reasonable well-being in the underlying real economy? Or is that worries about oil prices is an old boring story?


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