THURSDAY:
The big news Thursday is the oil inventory data now that oil has slipped back up into the mid-fifties. Last week's lower inventories, despite record high levels of crude, helped spark the rebound that was fanned with the Saudi king went to the hospital and sparked concerns of unrest in Saudi Arabia. Oil is not the only news as factory orders and Q1 productivity will come out, but oil is the big part of the one-two punch to the market that is still a real problem. It has started a breakdown on several occasions just to recover as some tensions rose.
Higher oil will put a governor on the 'Fed be done' move. NASDAQ is near key resistance and SP500 is still dancing around 1200. If the Fed governors come out and start backtracking on what Fisher said Wednesday, the two factors that hung over the market to start the year will return to some extent. The Fed may truly be close to finished, though we have our doubts. Oil is back up at a tough level for the market to really be happy about. Given the market's move to resistance has been long, on overall light trade, and without a lot of rest (at least for NASDAQ), the oil factor could re-emerge as a brake on the upside. Further, Friday is jobs day, and the market tends to hem and haw ahead of that report, particularly after a strong run.
What we do at this point is watch how NASDAQ handles 2100 and watch the volume as it tries that level and if it fades back. We saw some stocks in the leadership category rally on strong volume Wednesday and some start to peel back on strong volume. That divergence means you watch closely what overall volume does if the indices start a pause or a pullback. You don't want to see volume jump at a key resistance level, at least not for more than a session. Thus far the move has been solid enough with strong volume at key points, but with oil back at $54/bbl and a rally based on the Fed doing the unlikely and stopping early, you have to be ready if the foundation starts to crumble. |
