MARKET UPDATE

The S&P 500 moved down below 1302 earlier this morning, but it has since come back above it. The Dow is down 147 points right now after having been down over 200. Although the move today looks very bearish, I'd like to see it close below 1302 (or even its 50 day MA) before I start to get too aggressive to the downside. The market is giving out a lot of mixed signals which means it could still have some wild swings back and forth over the next few days. Commodity prices are down big today with oil leading the way. This is a divergence from how oil and the markets have been trading lately. The sharp move down in oil, gold, and silver should have some follow through to the downside over the next few days. However, this doesn't necessarily mean they are collapsing. When the oil trade gets hot...especially when it is tied to the Middle East, it usually lasts for several months. It wouldn't surprise me to get another run in these commodities, but for now it would be smart to wait and see if they pull back a bit more. The dollar is very strong today which is also contributing to the weakness in the commodity sector. If the dollar stages a rally over the next few weeks, it could continue to put pressure on commodity prices. Lower oil should be bullish for the markets, but if the recent high oil prices have damaged the bull market, we could see a market drop along with a drop in oil...until investors think the value has returned. You can now see some of the conflicting signals that we are getting in this market. You can also begin to understand why the market is making these wild swings back and forth...and why I am not putting too much money in trades right now. If you are looking at a trade, look at the TLT (calls on the TLT). As money comes out of stocks and commodities, money managers and institutional investors need a place to go. They will often go to Treasury bonds until they can figure out what they will do next. This could lead to a short term pop on the TLT.