Once again those nefarious oil traders that had their way with crude oil prices for so long are now feeling the heat. I bet many are saying to themselves: “Darn, I wish the federal government kicked me out of oil while I was still ahead.” The thing now is when there was rotation out of oil speculators were able to transition into stocks.

Now, immediately upon exiting crude oil, speculators check into a triage center. Of course, for some there's no sympathy for those "mean old people that make a lot of money and leave us little folk out in the cold," literally and figuratively. 

I think Congress has bigger fish to fry and blame for the oil crisis. Oil companies are a much better villain than oil speculators. Those "evil folks" that dare make money in a capitalistic system are facing the burden of subsidizing my and your recreational travel, frivolous travel and choice to own gas-guzzling vehicles.

I wonder if people are going to take their extra $1,000 from the oil companies and:

A) Save it
B) Spend it on more gasoline
C) Determine at some point it’s not enough and demands more
D) Temporarily stave off foreclosure

While we’re at this whole notion that American oil companies control the price of oil let's go after the farmer because food prices are so much higher than they were. Lets take it a step even further, the folks that cut my grass should be paying me because the more they cut it the more it needs to be cut, a vicious cycle to be sure, someone should pay for this hellish scheme. I could go on and on with this line of thinking.

Now is not the time to make our largest companies weaker or to vilify them when OPEC is milking this for all its worth, taxes are adding to the pain and supply and demand has shifted markedly over the last few years.

The good news yesterday is that the market held up and displayed a little spunk. The bad news: Stocks couldn’t feed off the nose dive in crude oil to spring it forward. With earnings season winding down one has to wonder what could spark the market higher. Heck, the next employment report is a month off and the Federal Reserve will probably be on pause for the foreseeable future.

The only news that could possibly come out of financials and homebuilders (WCI Communities (WCI) which Carl Icahn said was uniquely positioned last year filed Chapter 11 bankruptcy after its Bonita Springs, Florida development bit the bullet) would have to be negative in nature. Sure, oil could breakdown and that would help the airlines but the rational for the move lower in crude wouldn’t bode well for stocks. At this point a weaker global economy, while beneficial with respect to crude oil, isn’t the kind of backdrop for massive stock market rallies.

(By the way, on the topic of oil, while senator Obama suggests Senator McCain is off base for bringing up the psychological aspect of oil prices, it wasn’t a coincidence that when the presumed Democratic candidate switched his opinion on off shore drilling crude oil prices plummeted. The president’s office is the ultimate bully pulpit. When President Bush talked up off shore drilling a couple of weeks ago crude oil stumbled and it hasn’t looked the same since.)

I will say inflationary pressures are really beginning to abate and maybe that could spark or germinate a rebound in equities. Stocks are cheap but that doesn’t mean they can’t get cheaper. Although oil took a hit it held at $120.00 which has become a major support point. By the same token, the S&P 500 failed to cross above its 200-day moving average, a clear red flag.

The S&P 500 now sees support at 1,240 then it would be highly likely the index would form a double bottom at 1,200. One the upside 1,260 is early resistance but the big move to the upside... the trading trigger... comes with a close above 1,300.


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