Oil Soars, Dollar...Stocks Fall

DJIA - 372.75, -3.27% SP500 - 47.99, -3.82% NASDAQ Comp. - 94.92, -4.17% Russell 2000 - 33.30, -4.42% Exchange NYSE NASD Advancing 446 697 Declining 2,572 2,239 Oil $120.92 +$16.37 $109.37 +$6.62 (November 08 contract) Gold $909.00 +$44.30 $SOX 318.52 -15.39 Strongest Sectors: XLP -0.54%...XLB -1.28%...XLE -1.75% Weakest Sectors: XLF -8.18%...XLY -4.11%...XLI -2.66% Sector Watch Up Trending: Sideways: XLF, XLI, XLV, XLP, XLY Down Trending: XLE, XLU, XLB, XLK Oil had its largest one day price increase since 1984 when oil futures began trading on the NYMEX. The jump was fueled by a falling dollar and speculation of an increase in economic growth as a result of the financial bailout plan currently being proposed. There is also the perception that some of today’s buying was short covering on the October contract which expires today. This appears to be an interesting contrast; oil rises due to uncertainty about the financial bailout plan and oil also rises because some believe the financial bailout will spur economic growth. This appears to be the financial bailout is bad and good. Oh well so much for explanations…this much we do know the dollar did fall and oil did rise. The November contract experienced a relatively more modest rise, so it will be interesting to see how it trades on Tuesday. The fact that XLE, the Energy sector ETF, fell 1.75% on Monday shows that the rise in oil prices did not translate into a rise in oil and energy stocks. This could be because traders didn’t think that the rise was more than a speculative pop which they expect to fade. Again we’ll watch with great interest on Tuesday. All sectors were lower on Monday and decliners led advancers 5 to 1 on the NYSE. The Financial sector, XLF, which was Fridays strongest sector gave back most its gains on Monday coming in as the weakest sector. Index Commentary The DJIA bounced down from its moving averages to close at the S3 level of Friday's large white candle...key short term support the S1 level of Thursday's large white candle. The SPX also bounced down at the resistance of its moving averages to close just below the S3 level of Friday's candle...key short term support is Thursday's S1 level. The Nasdaq closed Friday morning's gap and closed into Thursday whitle candle...the SOX was weak on Monday and it is easy to see why the Nasdaq fell further than the other indices...watch the S2 level on Thursday's candle. The RUT closed below its 20 and 30 DMA and gave back more than Friday’s gain...watch the 200 DMA support and the S1 level of Thursday's large white candle. Friday’s Action Moving Up: AEM, POT, GDX, CF, BUCY, CNX, MEE, PNRA Moving Down: MA, BIDU, FSLR, GS, AAPL, AMZN, DECK, RIMM, NDAQ, PCLN, CELG, STRA, LDK, NUE, X, GRMN, V, DRYS, SOHU, EBAY, MER, EXPE, SINA, MON, SCHN, WRC, IBM, KMT, NIHD, COH, BRCM, INFY, UAUA, FMCN, ONXX, LCC, AMLN, HANS, LAMR Intermediate Term Market Trend: Neutral Short Term Market Trend: Neutral