TradeMaster Daily Stock Alerts Blog

Yesterday was full of sound and fury. The major indices rallied strong out of the gate. OIl prices were crushed. Then, the rally turned ugly. The Dow was down 130 in the early afternoon. Stocks then staged an impressive rally to get back in the black befor finally settling for modest losses. Plenty of sound and fury, all right, but did it signify anything?

I’ll leave that for you to decide. But I do have a couple of thoughts. Oil prices and stocks rallied side by side for 2-3 years. That’s because oil prices were the barometer for global growth. Demand for oil meant there was demand for goods. Corporate profits stayed strong and so did stocks.

So the investment world has mixed feelings about lower oil prices. Sure, cheaper oil might put more money in consumers pockets. But it also can be taken as a sign of falling demand. Ah, what’s a trader to do?

The other point of interest from yesteday’s action is technical. All the major indices are flirting with some serious support/resistance zones. For the S&P 500, my chief analyst has 1252 as critical support. After a dip below that level, the S&P managed to fight back to close at 1253. An impressive show of strength to be sure. But will it last?

I’ll take a stab at this one, before Benson gets in to the office and tells me I’m wrong. Ultimately, I think the S&P 500 will trade lower. But first, we get a nice mid-summer bear market rally. Benson?

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