The market is reluctant to go up and its behavior is not exactly what I had envisioned. The pull back from the highs is already 45 points long, much bigger than other similar moves at previous tops.
The put/call ratio is oversold, but it does not imply that the market cannot continue downwards.
However, I will still have a bullish short term bias as long as yesterday's SPX lows hold. I will try again to go along as soon as I see some convincing positive action today.
Meanwhile the price of oil has gone wild. Here is a weekly chart of the April contract
I agree with Mr. Futia's analysis regarding market sentiment towards oil. I do not know about long term (years) but over the intermediate term his conclusions match my expectations of a weaker economy for a while.
This means that a good trade idea would be to sell oil. I have measured the previous up moves for this contract and the latest rally seems as big as it can get at current levels. I think a top may be in the cards even today. By my calculations, selling above $104 is a bargain.
The easing in oil prices might also spark a short term rally in the stock market.
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