Early in the session higher crude oil prices were pressuring the stock indexes. Later in the session the Fed minutes were released and the indexes started dropping with more urgency. It seems the market was worried about the Fed saying they were about done with dropping interest rates. I thought everyone knew that. If that was so earthshaking then it shouldn’t have caused the dollar to drop as much as it did. But I suppose with higher oil prices there will be concern that Euroland will do the responsible thing and try to fight almost certain inflation by raising interest rates. Whatever the reason, the upthrust bars on all the indexes from three days ago, along with bearish momentum divergence was a pretty good warning that a pullback was probable. I hedged my comments a bit yesterday when the indexes didn’t seem to want to follow through. There was some bounce off the faster (cyan) line yesterday. Today price went down to, and slightly through, the slower blue line. Price also broke through an uptrend line (yellow line). The Nasdaq had a similar pattern, however price hasn’t yet pulled back to an uptrend line drawn from the same pivots as on the S&P. Volume did pick up on this decline. In hindsight I should have had more conviction about this drop in the comment yesterday. The technical setup was there, although it was still against the trend. It is easy to expect failed signals and quick turnarounds when that’s what many of the markets have been doing so often. There are two areas of support where I drew the green horizontal lines, both off obvious pivots. It’s not too encouraging for the bulls when the market finally moves with conviction, opening on one end of the range and closing at the other, and this time with increasing volume. Oil will probably provide the best clue for the near term direction. Oil was up sharply today, and is up another dollar in the after hours as I write this. There are literally boat loads of oil, no shortage anywhere, and yet prices are galloping to the moon. It seems like a blow-off. It seems like momentum chasing momentum. If that is the case, momentum chasers will most likely wish they had taken profits on the way up (but they never do). Volume on the futures contract is one of the highest I can find, and has risen exponentially along with price on the USO etf. It is difficult to call a top when a futures market goes parabolic. I’ve been wanting to short this market for the last $30, but have learned not to fight an uptrend unless there are signs of momentum divergence. But if this market is blowing off, finally, then I would suspect the stock indexes will overcome this bearish looking chart, and that fears of a rising rate environment for the Euro currency will abate.