Market has been moving sideways to higher in the last few weeks andsold off hard today on higher volume as oil crossed $60/barrel. Italmost seems like December where the market churned higher, and thenjust got crushed in January.
Hold onto the stronger stocks as one distribution day won't kill themarket, but definitely getting rid of the laggards. This is a goodtime to start looking for new setups. It seems we will need onemore down to sideways week to allow for proper bases to setup in thestronger stocks. Some are already setup just waiting for a signalfrom the market.
Oil reached $60 a barrel, but it almost seems that a double top hasnow formed. If these levels are sustained the market will needsometime to digest which would mean that a summer correction in themarkets is 90% likely, unless oil retreats away from $60/barrel.What will the market be looking for? How will oil in the $60'seffect the economy. $50's didn't hurt. But will the $60's?
Even if we do start a correction here, we'll probably see anotherweek or two rally somewhere during earnings season. If this is thecase and the rally is weak, then even the strongest of stocks needto be examined even closer, and possibly sold. For now, just getrid of the laggards.
Only time will tell, for now better get safe then sorry.