It seems I picked a good week to be on vacation. Both commodites and equities have been throwing all kinds of mixed signals, and I certainly would have been hoodwinked. As mentioned yesterday, I firmly believe that commodities will experience another round of heavy selling before their next bull run, and that the selling will correspond with a break in oil's big run. Well, oil tried to break today, but rallied back to even, so the wait continues.
As for equities, the case for the larger rally, which I discussed extensively before my vacation, received a big boost today as the S&P 500 finally closed above 1420 resistance:
As measured by the base preceding this breakout, it would seem SPX 1455 is now in sight.
The NDX also put in a good showing by reversing yesterday's bearish candle:
On a final note, a rant. An article posted on BusinessWeek.com today (and also highlighted in the news bytes of this web site) describes how Congress is trying to pass a bill to mandate higher margins on oil futures. Their reasoning (sic) is that speculators are causing the surge in oil prices and therefore limiting the number of contracts a speculator can hold will bring down oil prices. This concept is absurd. If Congress wants to rein in oil prices (and the prices of all other commodities for that matter), they need to look within and get their rampant spending under control. The spending policies of this country are destroying our currency by inducing the Fed to monetize the debt. These actions can only cause the price of resources to increase for our country.
Now, perhaps your Congressmen know all this. Perhaps they are proposing this bill simply as a way to deflect blame from themselves. Either way, people need to be educated. They need to put pressure on Congress and stop this destructive game. And most of all, they need to be free to speculate in futures markets to protect (hedge) themselves from all this nonsense.