Stocks Gains Despite Rising Oil...

The Dow gained 52.43 points today despite oil hitting fresh highs once again. So far, the Dow has been behaving in the exact same fashion it did when it rebounded last month, so, if it follows up strongly tomorrow, we could look forward to a significant break of the 13000 resistance level. How about the rising oil price? That's the only thing nagging me right now. Excluding oil, the economy and the stock market is well poised for a recovery. In fact, the stock market has been rising for over a month now. However, crude oil price, being of negative correlation to stock prices, could be an indication of lower stock prices to come if it continue to rise. In fact, crude oil has been on an extremely strong uptrend since the beginning of 2007, in line with the credit crisis and weakening of the dollar. Yes, the weaker dollar was certainly a huge reason why crude oil is this high, the other reason being the fact that supply is reducing around the world but OPEC is not going to meet until September. The US dollar has strengthened significantly over the past month but it doesn't seem to have an impact on crude oil prices yet as continual reduction in oil inventory kept prices rising. The point to consider now is, how much is this rise in crude oil price supported by fundamentals? Reduction in oil inventory is certainly cause for oil to rise due to supply and demand but has prices gone beyond supply and demand model? I see that oil is certainly over extended and the very moment a weakness in oil fundamentals is detected, a self defeating process would certainly occur taking oil prices down in the same explosive fashion we saw back in 2006. Anyone still willing to speculate on higher oil prices at this high level should do so through call options on the USO with only an amount of money that you can afford to lose. USO is the ETF tracking oil futures and is as close to buying actual crude oil as it gets.