Market Extended And Oil Is On The Move

The market on Friday could be seen as a reversal day. It opened up more than 150 points on the Dow, then it drifted below 6500. In the last 30 minutes of trading, it rallied to regain all the losses and closed up little more than 32 points. It doesn't matter what we call it, short covering or bargain hunting. What is clear is the market is too extended on the downside to initiate new short positions, and might be too soon to go long. But the price actions surely indicate a relief rally is in the work. Whether it will come on Monday will be anyone's guess. But I will start cutting back on my shorts and wait for the relief rally to play itself out.









Not only the market might be getting ready for a bounce, the oil has been moving up. Looking at the light crude future contract, it appears oil could move to the 50-55 level in the short term, and the ETF USO could move above 30.