Oil is driving the markets. In the past, I have written about oil being the dog and gold being the tail. Now it seems all world markets are keying off what oil does. It is an amazing circumstance.
Here are links to some charts:
USO, DIA, SPY, IWM, EEM, GLD
USO (oil exchange traded fund) is in a strong trending market. Predicting a top is risky business and there are no signs of that. USO hasn't really gone parabolic, just slowly, steadily churning higher.
Speaking of parabolic, the GLD chart has that kind of potential. Gold has underperformed oil, if gold had kept up it would be more like $1400 now instead of $900.
DIA (Dow Jones Industrial Average) has broken the March lows. This is psychologically bad because many novice investors track the DJIA not the broader indexes. SPY (SP500) is close to a retest, just two or three points above the March lows. Like I said, I think there is a 50/50 chance the March lows will be broken. IWM (Russell 2000). IWM is showing relative strength vs. the bigger cap indices. EEM (emerging markets ETF) chart is similar to the IWM chart, holding above support.
Charts are charts, and aren't a guarantee of anything. The most troubling chart for the stock market is USO because the price of oil seems to be driving the stock market lower and there are no technical signs of a top in USO. Obviously when something has seen a decent run, there are often sharp corrections along the way. It is lower risk to wait for support and resistance to be established and trade off them, than to be the hero and call "top" or "bottom."
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