Previous Oil Rally Was Just Nonsense

The large short squeeze in oil prices was based on the fiction from Saudi Arabia and Russia that prices should rise as price levels would be frozen.

That combined with Iran’s transparent support meant production would still increase.

The entire episode was a phony rally only leading to a squeeze. That allowed prices to rise for stocks overall for a three day WTF global stock market rally.

Nevertheless, the rally put stocks into the mid-range rally limits we thought were possible at S&P 500 Index 1902 to 1956, the same levels we forecast, and markets approached, back on January 29^th.

Markets were short-term overbought prior to Thursday as the trusty McClellan Oscillator ($NYMO) displayed Wednesday. So we had the logical reaction down Thursday.

Economic data Thursday wasn’t inspiring as Jobless Claims fell to 262K as many have exhausted their benefits; the Philly Fed Mfg Survey fell for the 6^th month in a row to only -2.6; and, Leading Indicators were flat at a weak -0.2%.

Apple (AAPL) shares fell sharply as the company reported its first (gasp!) decline in iPhone sales. I only display this given the high weighting the stock has on many indexes.

Market sectors moving higher included: Gold (GLD), Gold Stocks (GDX), Silver (SLV), Treasury Bonds (TLT), Utilities (XLU) and few others.

Market sectors moving lower included: Just about everything else.

Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).

Volume was extremely light Thursday and breadth per the WSJ was mixed to negative.

Chart Of The Day

We should wait and see how the week will end.

Let’s see what happens.