THE ENERGY DRAG

It's true the S&P did break below the yearly cycle low and that is a warning sign that the cyclical bull may be in the process of expiring. However most of the market has not confirmed that move.

The obvious problem is that energy is now a big part of the S&P and the market is very nervous about the presidents knee jerk reaction to what is happening in the gulf.

The energy stocks are a big drag on the market right now and a big reason why the S&P broke below the February low while the rest of the market has not.

I tend to look on the non-confirmation as a bullish sign and I'm still expecting one more leg up in this bull.

Let's face it sooner or later the problem in the gulf is going to be corrected and oil companies will go back to business as usual. When that happens its going to take a significant amount of pressure off the market and I won't be at all surprised to see a powerful rebound out of this intermediate low.