STRIKE 3 To The Bulls!

Yes, I hate to make this call but it seems like the bulls have taken a defeat this time round as oil continues its menacing march past the $134 mark, compounded by a pessimistic outlook by the Fed. On top of that, the Fed is not about to go easy on the economy in view of rising inflation caused by high oil prices. These factors eroded the optimism in the market faster than an avalanche as the Dow tumbled to close down 227.49 points right after the Fed speech for a total 2 days loss of 426.97 points or 3.28%. At this juncture, I can conclude that as long as oil stays high, the market stays under pressure. On the technical front, the Dow's 30MA and the 12750 level has failed to hold up as a support levels and is now right at the bottom of its regression channel. As I mentioned yesterday, this is the failure that will make me re-assess the market and my conclusion is that if the 12500 level fails to hold as support, we could see the market go sideways for a while and if oil continues to march towards the $150 critical level, the market is going to go down. Certainly a good time to start keeping close stops for your longs and start building on your shorts.