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The market rally depends on crude oil

Posted May 13 2008, 08:56 PM by Charley Blaine
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The chart of the Standard & Poor's 500 Index is telling me the market could move higher and happily so -- if oil prices will cooperate. That is a big if.

Fact is, the index is giving no signs of totally falling apart. It's nicely above its 50-day moving average, and it's moving in parallel with the moving average. Something that gives an investor a warm feeling inside.

And it is forming a support level at about 1,383. That means buying will be triggered if the index hits that number. Again, that's a sign of stability. Moreover, it looks resilient. On May 1, the index crossed 1,400 for the first time since Jan. 14, and it has closed above 1,400 seven out of the last nine trading sessions.

And the rally might have legs. If you look at the chart for the year to date, it looks like a longer-term bullish trend line has formed from the bottom of 1,256.98 on March 17 through 1,324.25 (the low of April 15) and 1,386.34, the low on Monday.

But let us not get too giddy here because oil still must be dealt with.

The index peaked at 1,422.50 on May 2. That's near the 200-day moving average for the index, and it has not come close to moving past that level since.  The resistance set in as investors reacted to crude oil surging well above $120 a barrel in New York. Crude nearly hit $127 today.

So, crude oil bears watching and not just because rising crude pushes gasoline prices higher.

I should note a possible counter-theory on why the index broke may also be that on May 3, Microsoft walked away from its $47.5 billion bid for Yahoo. Coincidence? Dunno. Maybe somebody has a thought? (Microsoft, by the way, is the publisher of MSN Money.)  

Comments

 

I agree with some of the posts. the rich are getting richer and the middle class is being wiped out slowly but surely. There is going to be a revolution by your guns and ammo now.

The textbook definition of a recession is two consecutive quarters of a declining Real GDP. You decide if were there or not. Think about this. Years ago China and India didn't need oil like they do today. Well now that they are both forming a middle class and starting to live the lives that we do, it puts pressure on who gets the oil and all the other supplies (Food, water, energy, etc). The Price of Oil is determined by bids on the exchange and if everyone needs it, what does that do? Drive up the price. We do need to take the pressure off but it is so expensive to go after more oil that it probably won't make a difference. It's also very expensive to find alternative energy solutions and America is not committed yet to completely change our lifestyles.

First we make a promise be U S buy U S . If we avoid smoking,wines,cold drinks,non veg. food, junk foods and sugar products we can solve maney problems of our country. I saw eating habits make direct effect on our body.If we save money we can help others. Increased oil price not a big problem.It is just tell to us live in manner.

It's not the market that is in trouble, it's Joe Blow with his IRA or Keough or whatever invested in the market that's in trouble. The dollar has lost 30-40% of it's value in the last year, but it is being propped up by the feds manipulation. Our govt. borrows money from China, Russia, Soviet Union, Saudi Arabia, etc. and gives it to it's cororate masters and is sending the bill to our children and grandchildren. When they discover what's going on they are not going to be pleased about it.

SELFISHNESS AND GREED HAS PERMIATED THE HEARTS OF SOME AMERICANS AGAINST IMMIGRANTS AND THOSE LESS FORTUNATE. THE CRIES AGAINST IMMIGRANTS HAVE BEEN HEARD VERY LOUDLY IN THE MEDIA.  IF IT WAS NOT FOR THE GOVERNEMENT'S DECISIONS, WHO SPEAKS FOR THE PEOPLE,AMERICANS WOULD PROBABLE NOT CHOOSE TO DO ONE CHARITABLE THING OR LEND A HELPING HAND TO ANYONE, BUT OURSELVES. ALL OF A SUDDEN PEOPLE ARE TALKING ABOUT HELPING AND SHARING. I TOTALLY UNDERSTAND THAT WE CAN NOT ALLOW OURSELVES TO BE ROBBED BLIND OR GO INTO ECONOMIC CRISIS FIGHTING FOR PEOPLES WHO DO NOT CARE OR WANT TO PROSPER. BUT WHAT ABOUT THE MEXICAN IMMIGRANTS, THE HAITIAN IMMIGRANTS WHO ARE BEING SHUNNED FROM AMERICA. LET US NOT BE SELFISH. WE REAP WHAT WE SOW.  STOP HINDERING OTHERS' DREAMS FOR FREEDOM AND PROSPERITY, AND WE WILL PROSPER. THERE IS BLESSING IN UNSELFISHNESS. WHO KNOWS, THE NEXT BEST IDEA MAY COME FROM AN IMMIGRANT.

EVERYONE IS TALKING ABOUT SWITCHING TO ELECTRICITY--THOSE PLANTS DON'T USE ANY OIL FOR OPPERATIONS?

The retarded monkeys that run this government have no interest in doing things to help anyone but themselves. Unfortunately this will not change until we remove all of them at once, which will never happen. The people have the power to make the monkeys work for us, but Joe sixpack is too busy watching football, so the monkeys pass laws that benefit themselves and not us. if anyone doubts this, feel free to read the case eminent domain case that took land from homeowners and gave it to Pfizer.

There is not need to blame everyone else for the price of gas. Sooner or later what goes around comes around.  We knew this day was coming!  We don't have to go on vacations, trips, or whatever.  Try to conserve.  America has not done that in a very long time!  Go when you have to go, if you run all of the time, don't complain just stop running!

When our government was formed, it was for the people. they received very little pay if any.  Now, they are rolling in the big bucks and doing less for the people.

We now work for the government, they certainly don't work for us! Furthermore, a new President won't solve any problems. "Cookie cutter molds"!!!

Electricity is the anwser, its the ONLY way forward. Still, there are some that need to come to grips with this. Electricity cuts off oil demand big time. The faster skeptics accept  this the better off everyone will be. I think most people already understand, but personal ego (motorheads) and special interest "groups" are getting in the way. They don't want their engines taken away. Awwwww.

Lets just keep all food and seed in the USA for ransom of lets say 60 dollor a barrel oil the world cant feed its self so lets show them what will feed the world we have alot more oil stock piled than they have food we need our own oil wells opened back up that they caped when opec said they will get us oil cheaper. Yes in the early eighties we caped oil wells cause they could get us oil cheaper well its time to return the crunch of the dollor. supply us by us food and oil no one comes to us in our time of need so lets return it..

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