Something important happened today, and it wasn't just that oil tanked $4.50 per barrel, though I was intrigued to see such a strong reversal of yesterday's gains. No doubt, if the price of crude resolves itself such that Monday turns out to be the top, I will hardly have the composure to restrain myself from bragging for weeks on end for having called it.
Calling it is one thing. Playing it is another. My only attempts thus far have been a brief, but profitable, short on an oil futures contract and the sale of some airline puts with the thought that a crash in oil would put the airline options out of their misery. So far, so good. However, the total gain on these plays won't amount to much more than a footnote.
Anyway, back to the point. Not long after today's earlier post, in which I commented how down-sloping channels usually reach ends not unlike Brittany's career, the market commenced to ascend directly out of the top of the channel.
The SPX has also yet to violate the 1325 support area I've been harping about.
The important occurrence of the day, which likely instigated the aforementioned and unexpected rally, was that the banking index turned an about face, erased a 3% decline, and closed marginally higher.
One should be remiss to try calling a bottom in the banks here. More often than not, reversals take time to form, shaking out impatiently eager traders in the process. I'd guess the banks bounce for a bit, fall rapidly to new lows (putting in a bullish MACD divergence in the wake), then make an attempt at a larger rally. Keep in mind that reversals need immediate follow-thru for confirmation. If banks turn south again tomorrow, it would pose a very bearish omen.
Tech stocks, on the other hand, feel no compunction over the banking industry.
So, as bearish as everything was feeling yesterday, there are warning signs galore of an impending rally. Of course, there is an FOMC meeting next week, and stocks do tend to produce rallies of an ineffable nature just before such gatherings. I'm going to keep my cards close to my chest and just check any raises at this point.