Crude Oil Fights Back!

FUNDAMENTAL ANALYSIS
Just when we thought oil is going to gradually settle down to more sensible levels, crude oil price came back in a big way, making an intraday new high of over $120! This put immediate pressure on the stock market as the Dow retreats slightly by 88.6 points or 0.68%, barely even 1%. This shows one simple fact and that is, investors are increasingly bullish on the market and is not about to allow one or two bad things to spoil the day significantly. Being the final straw that needs to drop before a full scale market rally can happen, oil have been hanging in there with geopolitical factors forcefully holding its price high. In fact, the fundamentals and technicals of crude oil price does support higher prices to come. However, one important factor that may contribute to lower oil prices in the forseeable future is the rebound of the US dollar since 23 April 2008. The US dollar has strengthened significantly and could be depended upon to continue strengthening with no more rate cuts to be expected in the near term. Other than oil, all my 15 reasons for the market recovery remains strong and investor sentiments grow more and more optimistic by the day.

TECHNICAL ANALYSIS
As expected, the Dow begun to pullback today in order to muster more energy for a significant breakout of the 13000 resistance zone. In fact, a retreat back down to as low as 12650 could still be reasonable and does not shake the short term uptrend of the Dow. So far, the short to mid term bullish channel of the Dow has been established and supported so there are no reasons to doubt the validity of this rally.