Stocks fall, Dollar and Oil rise

In my last update on the stock indexes seemed to have come into balance as can be seen in the volume distribution market profile graphic (see previous post). With the market having sluggishly risen on light volume and the rally looking like it was stalling I thought the path of least resistance coming out of balance would be to the downside, and that prices would re-test back into the moving average area. Then, of course, the very next day the indexes rallied sharply, bouncing right off the faster moving average. The indexes did try to sell off early in the session on Tuesday, but then decided to test the upside with a close sharply higher, but again with low volume, although a slight bit heavier than Monday. The value area was again overlapping, which makes the profile look a little less bullish than the higher close would indicate. Then today (Wednesday) the indexes opened slightly lower, then rallied, but couldn’t find any buying interest. In the case of the Nasdaq, price briefly explored over the recent highs, and found there was no business to be done up there, so the Nasdaq quickly retreated, leaving a selling tail. The S&P didn’t push to new highs as the Nasdaq did, but also left a selling tail. Both indexes rotated back and forth within the previous value area, until later in the session when the selling picked up and both indexes took out the lows of the previous three sessions before re-establishing some sort of balance near the close, at much lower prices. Volume picked up slightly on the drop today, but still on the light side compared to the volume earlier in the year. Now both indexes are back in the moving average area, in between the fast and slow lines, which are still in a bullish mode. Momentum is still down with some sign of bearish divergence. If the moving averages stay positive and hold prices, and hopefully volume declines into the pullback, a buy set-up could occur in the coming days. If volume picks up, and/or the moving averages don’t hold, then there could be a test of the pivot in mid-April. If that doesn’t hold, the bear goes back in the box.
The dollar resumed its rally. Crude made another upmove despite the dollar rally. Volume on the USO etf was unusually heavy. Maybe this could be a blow-off. The futures contract volume was heavy, but didn’t indicate an extreme. Momentum and trends are pointing straight up. The only thing I don’t see as so bullish are the fundamentals, despite the Goldman call of $200. They were correct on the $100 call, which seemed absurd when it was made, but now seems low. It’s amazing how analysts will make a correct call and then when that call is met they’ll make a much higher call. They’ll be wrong eventually. They’ll probably wish they had stuck with their original forecast when the speculation in crude ends.