Daily Market Update – March 1, 2016 (7:30 AM)
While I expected that at some point the stock market would come to its senses and realize that it shouldn’t be reflexively following the path of oil, I don’t particularly want that realization to come until stocks have had a chance to make up for their earlier stupid decision to follow oil much lower.
Yesterday was an example of their deciding to go in opposite directions, but it was an unfortunate decision for stocks.
Oil turned around nicely yesterday and stocks went the other way.
This morning it seems as if the irrational relationship is back, although just like yesterday, the futures reflect only the early birds and their ability to forecast any given 6 1/2 hours after the opening bell rings, is pretty weak.
This morning both oil and stocks are higher, as some were beginning to take note that the S&P 500 sunk below an important technical line yesterday.
What they didn’t mention is that it only went above that 50 day moving average a session or two earlier after a prolonged period below.
Perspective is pretty important sometimes and that perspective was totally ignored for the benefit of those not actually bothering to look and charts.
For those who believe in the infallible nature of charts, hitting the 50 day moving average from above is a bearish sign and hitting it from below on the climb higher is a very bullish signal.
Maybe I missed it, but I didn’t hear those chart bulls come out and sing the praises of their charts a few days ago.
That may be because there still may be some good reason for caution, rather than sending out the bullish call that was based on a technical factor.
Especially in hindsight when it’s clear just how quickly that technical factor can disappear.
Or re-appear, as it could today.
I’ll still be watching today and keeping an eye on all of this week’s possible trades, most of which were too strong yesterday to have considered an entry, as they went higher early in the day along with the market and never really gave anything back when the market did.
I wouldn’t mind either some weakness or stability in those positions today, just as I’d like the same for the market for the rest of the week.
That could be a tall order as the Employment Situation Report is scheduled and anything goes once that’s released.
For the most part, with the uncertainty of the reaction of traders to any kind of news, I think that I would rather not be very aggressive at putting any cash to work.