Crude Crude CRUDE REALITY....

FUNDAMENTAL ANALYSIS
What started as an extremely strong day in the market ended up in complete disaster as the bulls totally gave up the gains for the day in one glorious retreat when crude oil hits $100 per barrel. Crude oil has been flirting with the $100 mark many times over the past few months but never have it closed up above $100 like it did today amidst threats from OPEC to cut production. Looks like OPEC wants oil above $100 in order to maximize the returns on their last drips of oil. So, how does $100 oil make such a huge impact on the stock market? High oil prices = higher production prices = higher retail prices = higher inflation = higher price at the pumps = lower consumer spending = NO RATE CUT! That conclusion is what investors are worried about! The rate cuts so far has deflated the dollar too much, in fact, so much that it has started to import inflation. Importing inflation means that imported goods are becoming more expensive due to the lower value of the dollar. The fact that the market has held on to gains very nicely until crude oil breaks the $100 mark around 3pm ET, after which the market literally jumped off a cliff, indicated the amount of fear surrounding the $100 level. In fact, this inflation fear also showed up in commodities as investors flee to gold, pushing the price of gold upwards. If tomorrow's CPI numbers (see economic calendar) come in higher than expected, that would totally break the market as hopes of further rate cuts diminishes as inflation fears take central stage once again.

TECHNICAL ANALYSIS
More weakness today as the Dow failed to break the 30MA resistance level significantly for a 4th straight trading day. Nothing in the indicators are stopping the Dow from visiting the Jan lows before deciding where it wants to go. I maintain my prior outlook.