Oil Breaks Out!

FUNDAMENTAL ANALYSIS
After moving sideways for almost a month, oil staged a breakout today, shattering the hopes of all investors speculating in a turn around in oil. Oil broke the critical $140 resistance level today as more lip service by OPEC "predicted" oil would reach over $150 this year. OPEC's lip service today totally beat Uncle Ben's lip service yesterday. Like I said before, predictions always carry with it an element of self-fulfillment. What will determine the true course of oil? Reality. If oil inventory continues to be higher than expected like it just did, investors would see that the talks are not supported by reality at all. Well, this is going to be a drawn out battle and one that is definitely going to take the rest of the year.

TECHNICAL ANALYSIS
The Dow broke below the March Low support level as I have expected on strong volume as investors decide to keep the bears going. In fact, today's drop took all of the gains of 2007 away. The Intermediate and short term downtrend remains strong but do not be surprised to see a slight pull up before it goes any lower as this drop gets over extended. That is what we call a Bull Trap where the bulls get trapped in a fake rally. It is also what I always call a "Dead Cat Bounce".