Bulls Creeps Nearer To The Next Hurdle...

The Bulls won a glorious battle today as oil took the biggest single day hit of the month. The energy sector is also the loss leader today. Like I mentioned endlessly over the past 2 weeks, the bulls cannot have real strength unless oil and gold come down. Gold already begun a fresh bear trend and oil is all that is left standing. Today's correction in oil may or may not be meaningful at all. If oil rebounds tomorrow, today's correction would stand for nothing. If oil continues lower tomorrow, it may visit a short term support ($115) before deciding where to go. In short, don't expect a one day resolution. This has been a totally sideways week so far... could we see the Dow break to upside tomorrow, closing the week higher? I see it as a high possibility event as the Dow has made higher highs and higher lows for 2 consecutive days so far, which is a short term bullish pattern. Supporting this optimistic outlook is also the huge gain in the US dollar today, a further capitulation in new home sales and a drop in jobless claims. Especially important today are the drop in jobless claims and the recovering US dollar. Jobless claims is one number that drops as the economy picks up and a stronger dollar would certain help fight inflation, enabling stability and growth.

So, let's recap once again our signs of the bottom:

1. Recovering ISM index

2. Gold getting beaten like dogs

3. Consumer Sentiment index collasped (its always grimmest before dawn)

4. Fed bailout of BSC is demostration of their resolve not to allow the financial system to sink.

5. Existing home sales rising suggests possible start of the bottom in housing market.

6. Extremely steep bond yield curve suggests that smart money needs to move back into value stocks soon. (which is already rising as money moved back to equities from bonds)

7. GDP has not gone negative despite widespread speculation on an academic recession.

8. Capitulation in the job market with an 80,000 loss in March.

9. Biggest jump upwards in the Empire State Index in 5 years.

10. Inflation coming in inline with expectations.

11. Capitulation in the housing development market signalled by a 17 years low in housing start number.

12. Capitulation in the housing sales market as signalled by a multi-year low new home sales number.

13. Jobless claims decreasing, signalling an economic pickup.

14. US dollar demostrating clear signs of strength.

Don't wait until you can feel it on the streets before calling a market recovery.