Strike 2 To The Bulls!

FUNDAMENTAL ANALYSIS
The Dow retreated nearly 200 points today as oil tops $129 per barrel. Does this spell the end for the bulls? Not really (otherwise I would have just said "Strike 3 to the bulls" right?). The move in oil today is a traditional pre-summer surge as oil traders expect a surge in demand for the coming summer driving season. This happens every single year but I think that oil traders could be in for a nasty surprise as high oil prices discouraged driving this summer, resulting in an unexpectedly large oil inventory. That would really start an avalanche. So, even though the summer is a traditionally high demand season for oil that justifies higher prices, this year might just be different with oil already this high. (And if you are still driving that V8 engine vehicle, hey, time to change down to something more realistic, ok?)

TECHNICAL ANALYSIS
Has the bulls been defeated? Not just yet. The Dow retreated almost 200 points back down to its daily 30MA support level and off its short term overbought condition once again. I would say that the bulls and the bears are deadlocked with plenty of ammunition on each side. In fact, they have been this way this whole May. Again, tomorrow is going to be critical. If the Dow falls again tomorrow, closing below its 30MA significantly, we could see a quick disintegration of confidence as the old adage of selling in May and go away comes into the minds of most investors. This is certainly not a good time to be confidently long and that you should start to consider hedging some of your positions.


Dow Technical Chart By BEST Free Charting Software, TC2007! Download Now!