We have our doubts that the pennant formation show in the chart below is going to produce lower oil prices over the near term. More likely is that the cost of a barrel of crude will get to at least $147-$148 before peaking. To be more precise, we have been looking for a potential top in the July futures contract at exactly 148.31, a Hidden Pivot resistance with the potential to reverse the bullish tide. If the price of oil were to achieve that level soon ' say, within the next two to three weeks -- we'd have to rate it as bullish for stocks in general. That's because share prices lately have shown greater elasticity when energy prices were falling than when they were rising. One could infer from this that even though investors get spooked whenever energy quotes are surging higher, their fears are outweighed by a sense of relief when oil prices are falling. To the extent this is so, Wall Street bulls appear to have discounted significantly higher oil prices and are gearing to buy stocks no matter what. [Insert chart here] Make no mistake, the broad averages are all but certain to fall in the weeks ahead if the price of a barrel of crude is indeed about to tack on another $13-$14. But if the price of oil were to fall sharply thereafter, making investors more confident that a top was in, it would probably propel shares into a summer rally lasting well into August. Any such rally would be turbo-charged by short-covering. As much was evident last week, when bears got stampeded on Thursday and Friday, ostensibly because of what was happening in the oil pits. The rally faded on the first day, but on Friday it got second wind in the final
LATEST TRADES
