Ok so here's the deal

Oil and commodities are going parabolic. I'm seeing insane moves in smallcap oil and energy names, ie PDO, etc. Usually this kind of stuff happens as we enter the final stages of a momentum group. Oil and energy has been rallying for years now. I don't think we are near the top price wise, but we are near the top time wise (over the next few months). When a sector goes parabolic it can spike higher than anyone can imagine. In fact, the most money can be made actually going long on a parabolic move because prices go vertical.

The broader market is getting hit by these issues but it's important to remember that commodities are always CYCLICAL. Oil going back to $35/barrel is not out of the question. In the near term however, we are going to be plagued by issues of inflation. The Fed simply cannot continue to drop rates in this environment, and will need to actually raise rates soon. The fact that the Fed minutes today showed that rates will most likely not go any lower but did not cause the dollar to rally or oil to fall (it actually dropped, and oil actually rallied) is quite worrisome.

Tomorrow will be a critical day. Sometimes the initial reaction to anything Fed related cannot be trusted, so we'll see if the market can stage a rally.

April Rally

The market has been doing exceptionally well, reacting to both good and bad news by moving higher. In fact, we are now up almost 1500 points on the Dow from the low set by the BSC news. As we now approach the 200 day moving average for all the averages, I expect a pause, as we digest these gains. I received calls from several people asking about the market in general recently, and explained that the market never behaves in an "expected" manner. The credit environment has not changed substantially, but I think the most encouraging factor in this entire ordeal is that our US dollar has actually rallied while the Fed has executed about $200 billion in TSLF's. Dollar stabilization in this type of environment, I believe has provided an underlying bid for the entire market.

Personally, I have been focusing my efforts on trend trading GOOG after the blowout earnings report. Today it finally hit 600.

On a side note, MA and V have been doing very well, which was unexpected for me. The only trading I did in these names was going long MA post earnings, and selling during the same day. MA hit 300 today. Overall, their relative performance to each other has been relatively similar. V is up from approximately 60 to 85, a whopping 41%, while MA has rallied from approximatel 210 to 300, or 45%. I still remain more bullish on MA than V, despite its share price. Ultimately I expect MA to greatly outperform V percentage wise. V is enjoying a great deal of post IPO hype.

For 2008, I still don't have a very optimistic view of our economy as a whole. Future earnings outlook has not been entirely bullish, and I believe we are in a holding pattern for another 3 months, when we get another round of earnings. Without the expectation of near term growth in earnings, i find it hard for institutions to become heavily involved in buying here. Without institutional support, we may see a steady drift lower. However, as a trader, I am always open to any and all scenarios that may occur. The most important thing to do is to recognize a trend and follow it, regardless of what kind of headlines you see out there.