Die Oil Die!

I don't want oil to die. I'm simply speaking German, saying "The Oil The."

In all seriousness, oil bulls must be quaking in their jockies as crude is down over $9 this morning to $106.35 a barrel as Hurricane Gustav was less disastrous than expected. At the same time, the U.S. dollar Index is up about 1% to 78.38 today. Here are my thoughts on the near-term investment implications of today's action:

First, declining crude should be considered a minor positive for consumer spending. However, I emphasize the word minor. Gas prices will be coming down on the oil price weakness, but the credit crunch still lives and the housing market is still in the toilet.

As far as the dollar goes, if you're big into cyclicals and other exporters (like mega cap tech), you better be aware that the strong dollar will take a toll on overseas revenue and earnings growth. The dollar is still up year-over-year, but the quarterly contributions to growth are going to shrink significantly in the third quarter.

We're also hearing a lot about specialty retail stocks this morning as analysts are warning of a terrible back-to-school season. However, I'd be willing to bet that the teen retailers will actually experience a short-term bounce off of lousy August comp numbers given the rampant negativity.

As far as my positioning goes, I haven't made many trades as of late and I'm still heavily long consumer stocks. I own ATVI, GES, GME, PWRD, and SWIM, and I'm short HAR which I view as a victim of a strengthening dollar and weakening luxury automotive market. My strategy is not low risk. However, since I am an individual investor with a modest amount of capital, as well as mobile trading capabilities, I am liquid and ready to get out of the market at a moment's notice.