stocks pulled back five to ten percent

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stocks pulled back five to ten percent when gas hit danger zone.


By Matt Nesto | Breakout – 1 hour 51 minutes ago
It happened in 2008, then again in 2011. Finally in April 2012, average gasoline prices once again topped $3.85 a gallon. While still well shy of the record high $4.11 set in July of 2008, Jeff Kleintop, chief market strategist at LPL Financial says, every time pump prices top what he calls the "danger zone," stocks have taken a hit.

"For the last five years, whenever we got into (the danger zone), stocks pulled back back five to ten percent," Kleintop says in the attached video, in reference to the 2008, 2011 and 2012 price peaks.

Fortunately, after a sharp run-up in July, the past two weeks have seen a modest dip in gas prices, at a time when crude oil has held steady above $100 a barrel.

From Kleintop's point of view, it's only a matter of time before pump prices follow the run-up in oil. If he's right and high fuel costs do indeed begin to take a larger bite out of family budgets, then the danger zone curse could happen again.

"When you really increase a household expenditure, like gasoline, it can have a major impact on retail sales," he says, "so watch those retailers."

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