How High Will Oil Go?

The market was up briefly after the open, but has since rolled over and is under selling pressure again. Just about everyone will point to the turmoil in Libya and concerns it will spread into the middle east, but we know that the news breaks with the cycles. That is, the market was overbought and due for a correction. So I think it could have been any news that would have served as the selling spark. But Libya gets the credit.

That is not to make light of the situation, or the real concerns about rising oil prices. Nymex crude prices are up near $97.50, while the Brent crude (like that of Libya) has hit $110 already. Rising oil prices could crimp economic growth if they persist, and prices at the pump are likely to rise as well. So that is the trend that bears watching. But if Libya cools, I could see oil prices falling back quickly.

While energy prices are higher - gold is up near $1415 also - most industrial and ag commodity prices are lower today.

Tech stocks are lagging today after a poor earnings report from HPQ and a big drop in its stock.

Asian markets were mixed overnight; the dollar is surprisingly weak today, at the expense of a rising euro; the 10-year yield is lower to 3.44%; and the VIX is another 4% higher to 21.70.

Trading comment: The SPX has broken support at its 20-day moving average (1315), and the next support area is the big round number of 1300. After that, the 50-day average comes into play at 1286. The Nasdaq is already at its 50-day average today (2723). I want to start dipping my toe in and adding to some stocks that have pulled back. I am starting with the more "blue chip" type names. Many of the growth leaders that have had such big runs likely have more consolidating to do, as they were more extended. For those types, I want to see them build new bases and then start to look for breakouts from those bases. We are not there yet.