Just when you think oil can’t go any higher.. it just goes higher.  60 a barrel anyone?  It’s hard to believe that the price of oil was just $10/barrel in January ’99 and $17/barrel at the beginning of ’02.  Unbelievable.  Since bouncing off support around 45/barrel in early February, oil has traded higher in 21 of the past 27 trading days.  The rapid ascent has without a doubt kept a lid on any major market rally.  Yesterday, another spike in oil along with GM’s poor report sent stocks into a tailspin, sending both the Dow and S&P below critical support levels.

You see the Dow slipping below critical support of its upward trend line as well as the 50 day moving average.  The next likely level of support is the 10,500 range.  If the market can get a bounce from short term oversold conditions, it will be interesting to see how it responds to these new resistance areas.  It will provide more clues to market strength.  Now is certainly not the time to be making big bets on the long side.  Yesterday’s move indicates that opportunities on the short side probably have a much greater chance of success.

The scenario is nearly identical for the S&P.  Next level of support to keep an eye on is around 1175

The Nasdaq continues to stay submerged below resistance and continues to show no signs of life.  Key support to watch in the coming days is the area where the 200 day moving average and psychological support of 2000 converge.