Here is a link to Mark Hulbert's latest piece on MarketWatch.com.
Hulbert makes the following thought- provoking observation, one that is new to me: "The nearly universal consensus among the nearly 200 newsletters monitored by the Hulbert Financial Digest, as well as from investment-oriented blogs I read: Stock investors are in denial right now. Investors in the oil market, in contrast, are on solid ground." By this Hulbert means that the advisory and blogging community think the stock market is about to head much lower, while the record oil prices we are seeing just reflect solid supply-demand fundamentals, and that oil is headed higher.
I think this is a particularly interesting observation in light of market action. Oil, gold, and silver have been accelerating upward in what appears to be a parabolic rise. Such rallies can be very profitable for the longs but the problem is that they end without warning and are followed by a very bad drop. Along these lines I want to mention a couple of price levels that I think will prove to be signficant.
The first is the magic $100 per barrel mark in crude. I never believed we would see this level but I was wrong. However, I am willing to bet that the market will take just a peek above $100 and then collapse, probably all the way down to $75. I think $100 per barrel will attract many sellers and will scare off many buyers. Once the market starts downward few people will be willing to step in front of it.
The second interesting level is $850 in spot gold and $873 in December gold. These were the top prices in spot and in the front month contract at the January 1980 top in gold which was followed by a 19 year bear market all the way down to $252. I think the market will take a peek above these levels and then have a big break.
The stock market is interesting for a different reason. Over the past three months it has been battered by lots of bad news from the mortgage and credit markets. Yet it is still trading well above the level of its August 16 low (1370 in the cash S&P and 12,518 in the Dow industrials) and only about 5% below its peak level (so far) reached on October 11 at 1576 in the S&P and at 14,198 in the Dow. This resilience in the face of bad news is a sure sign that the stock market is headed much higher.