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In focus: Commodities rule

By Lawrence G. McMillan

The stock market is shooting back and forth like a futures contract.  In fact, the whole market seems to be tied quite directly to the price of oil, silver, gold, and the like.  When the market is linked to an unusual “force” such as this, some additional caution is required.  At least technical analysis doesn’t care why moves are being made, but rather is just concerned with the price movements themselves.

The S&P 500 Index SPX -0.36%    sold off last week, touching the 1330 level on Thursday, and nearly fell to that level again on Friday.  But then it bounced, leaving that as a support area.  In fact, the bounce early this week was quite strong, and it seemed as if the bulls had regained control.  Technical indicators improved, and there was a general sense that a challenge of the highs might be upcoming soon.  However, today’s action changed all of that, and it made some sense to view the rally on Monday and Tuesday of this week as more of a commodity relief rally that a true bullish movement.

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