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Does oil
matter?
Stocks broke a
three day losing streak yesterday despite the strong early gains being
completely given back, but an afternoon rally took the indices back into
positive territory.
For the
TSP, the C-fund was up 0.37%, the S-fund
gained 0.43%, the I-fund added 0.53%, and the F-fund (bonds)
lost 0.11%.
The S&P 500 pushed higher and is
now back within that stubborn little trading channel. It is struggling
somewhat, to get above the 1275 - 1280 area and it needs to break above that
level or risk a "flat-top" drop.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
The indicators are again flashing warning signs, but thus far the index has
ignored them. The PMO moved below its 10-day EMA which some use as a
sell signal. Also, the MACD is showing a negative divergence again, as
it has been moving down since its early December peak while the index
continues to move higher.
Oil has been slowly, but steadily climbing and just recently hit the $90
mark for the first time since mid-2008. Oil hit $90 for the first time
back in the fall of 2007, and if you recall, the market seemed to react
almost the same way as we had been seeing it react to the dollar. That
is, when oil was up, stocks went down. When oil pulled back, stocks
moved up.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
Of course we were on the verge of a major recession and financial crisis
back then, but at the time the price of oil and gas was being blamed for the
slow down in consumer spending. And whether it was a coincidence or
not, the $90 price of oil in 2007 coincided with the peak of the 2003-2007
bull market, and we have not been back to that level since. Well, here
we are again at $90.
The sentimenTrader.com's Smart Money / Dumb Money Confidence Indicator saw
the smart money confidence level move back down below the 30% level after
hitting 38 last week.
Courtesy of www.sentimentrader.com
Again, I don't know if we should be ignoring the indicators and just play
the trend until it ends, but as I have said before, many times trends like
this end with a thud when bad news hits. It's probably only a matter
of time, but who knows how high stocks can go before that happens?
Thanks for reading! We'll see you tomorrow.
Tom Crowley
Click here to discuss today's Market Commentary
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