The good news is that oil gave up the $3 gain it sported early this morning. The bad news is it still closed higher today, although only marginally. Anyone who believes that the day-to-day change in crude price is unimportant should take a look at the following chart.
Oil is in control of this market. No wonder the powers-that-be are trying so diligently to talk the price down. Anyone think we will bomb Iran before the election? No way.
I was planning to show how the SPX action over the last couple of days and point out how strongly it reeks of bearish consolidation. Normally, I would enter the next couple of days with a strong bearish bias (as if I didn't have one already). But with such a striking inverse correlation between the stocks and oil, does one think that technical analysis in the SPX really matters?
The NDX is playing catch up with the SPX, falling a percent today whle the latter was flat. In mid-May I noted how we were due for a pull-back because the NDX was so stretched above its 65DMA. Well, we are 10% lower now and still falling.
It has been fairly easy to be short over the last few weeks, but I'm switching to defensive mode. With an election around the corner, the economy in a vice grip, and a reckless Fed chairman, I simply don't feel comfortable with significant overnight positions. I'm going to stick with day trading and weigh my bets toward the short side setups.