Market Comment

The quick market run-up into the U.S. Thanksgiving was an abrupt short term spike, as I see it.

A sharp short term setback ahead?

S&P 500 Index (1401)

Oil U.S. Light Sweet Crude Futures ($55.81)

In a previous Comment I said I thought that Oil was hanging on by its teeth in the $60 area, and it might possibly be base-building.

Perhaps I was only half right. It's still hanging on by its teeth in the $60 area (more accurately $55-60), but now I think it's possible that after moving sideways for a month or so, this may turn out to have been a right shoulder. I'm not in a panic over this because $55 to $60 is a great price for oil.

The long term uptrend remains intact, and I'm now describing what I perceive to be a "B" wave in an ABC corrective phase in that long term uptrend.

This latest revelation has dashed my hopes for getting back into Oil stocks on the near term. My idea now is to wait until after the final "C" wave correction.

Market Comment

Back in July/06, when I called for an unusual seasonal market recovery into the fall, I didn't realize that markets were foreshadowing a Democratic sweep of the U.S. Congress and Senate. Markets have a habit of recovering when the Democrats win.

More recently, I have predicted a possible setback in the price of Gold. If money was parked in Gold while the Republicans were in charge, it should now flood back into U.S. markets, leaving Gold in the dust - so my Gold call may also be hinged to the Democratic election success.

Shortly after Mr. Bush was elected (yr 2000), a huge wave of selling hit the U.S. Dollar, and the downside pressure did not let up for a full five years. The extent of this debacle leaves no question as to who is in charge on Wall Street. Now my models are suggesting the potential for a sustained U.S. Dollar recovery in the offing - once again, as I see it, tied to the outcome of mid-term elections.

If I'm right about this, my market call, my Gold call, and my U.S. Dollar call, may all turn out to have been proxies for the outcome of the recent elections in the States. It's rare, but every once in awhile I have the feeling that I might be getting a glimpse of the big picture.

Oil U.S. Light Crude Futures ($59.45)

In a recent Comment on Oil, I said that we were hanging on by our teeth in the $60 area. We continue to do so, and I simply want to point out that among the categories I follow, Oil is about the only one that might be in a short term base-building phase at the moment.

I recognize that it might be a bit early to make positive comments on Oil. This is just a heads up. I'm watching it carefully.