Small caps, oil, and bears.. OH MY!

Small caps, oil, and bears.. OH MY!

After I wrote last night's post I looked at a few more things and noticed some bullish signs in the short term charts (1-2 days.)  This morning I woke up and checked the futures first thing at 4:30 am (yes, that is when I get up for work) and the futures were positive.  At that point I decided that I need to sidestep a further impulse higher, if the market should decide to put it on.  So, this morning at 5:30am I sent an email to my close friends letting them know that I was going to sell out of my short positions at a loss.  I wasn't happy about it for a majority of the day until I came home to my family and realized that there are more important things out there than a temporary loss of cash that will be regained.

Here are today's scores:

We are still at really high levels, but coming down a bit.  We have not had the sharp selloff that would signal a top, so I think the market may try for at least one more push higher.  That may have occurred today, as the market failed to reach a new high and sold off a majority of the gains into the close.  

Above is a depiction of small caps (the Russell 2000) vs the other major averages (DJIA, S&P, NASDAQ) over the last 4 trading days.  Last night I wrote about small caps leading the large caps lower before the DJIA starts to turn over.  We can see it happening.

Back in August I was bored one day and decided to build a comparison of Oil prices vs the DJIA.  I was looking for some kind of correlation.  I picked up on a couple things.  The most useful info for you right now is that since 2009, oil prices have collapsed in September.  Going long the second half of September would have met with nice gains.  The charts below show what I'm talking about nicely.

 Once again we are seeing Oil collapse in the second half of the month.  I'm not recommending it, necessarily, but I'm considering buying an oil ETF in the near future.

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