May 14, 2008

The market got off to a solid start today on the easing of inflation fears, as oil once again saw strong selling. If you take a look at the charts, especially OIH, a double top is beginning to form, with the 2nd top on much less volume and enthusiasm than the first top. A possible short trade, if it can break the closing price from 5/1/08. But this would be considered a high-risk trade, as oil has managed to defy logic for quite some time now. The indices continued to show strength today, except for the end when the market gave up much of its gains. This was very reminiscent of the action we saw earlier this year, where each day’s gains were met with strong selling in the final hour. However, we will need to see more of this before we can find any legitimate correlation between these two periods of time. The selling in the NASDAQ was the strongest, due mostly to technical selling at strong resistance levels on the charts.

Now to the NASDAQ and S&P Charts…