Today was a pretty good day. Ninety minutes before the close, it was a really good day. However, IWM and OIH recovered to some degree. In spite of that, we still whacked over 100 points off the Dow 30 and enjoyed a decent drop in oil-related items. So I'm  not complaining.

I've removed the "intra-Fib" retracements on the IWM, since I'm frankly not sure where they belong. I'd rather not be basing decisions on levels I'm not positive are valid. So we remain between the very broad ~64 to ~72 range on the IWM, somewhat near the upper range. We had a drop today on the best volume we've seen in about a month. It goes without saying that we need to stay below last Friday's highs to have a prayer in this market.

The Dow dropped away from the psychologically important 13,000 level. I've drawn a red line at 12,900 which seems to be the neckline (as it were) for this pattern. There's a heck of a lot of support between 11,800 and 12,800 – – a thousand points is a lot to chop through.

I've expressed concern several times about the Transports. This pattern isn't exactly acting like a launching point. It's still intact, but a drop beneath about 4,800 would render it impotent.

The NASDAQ Composite (which is going to get affected strongly after tomorrow's AAPL earnings) is likewise beneath its ~2,420 horizontal line. We've also got the advantage of being at the upper end of that channel you see.

I confess to being obsessed with OIH these days. In spite of a record close (yet again) for crude oil, we actually fell more than a percentage point here. As you can see, OIH is a good 40 points above any really serious support. But, God almighty, this thing has a lot of bulls behind it.

I've got a decent-sized position on the Russell 2000 (and the NASDAQ 100) indexes. Around 725 or so is the extremely important line in the sand.

There are plenty of stocks which are tempting to short simply because they are really "expensive." I put that in quotes, because shorting these momentum plays is dangerous. I have done it in a few cases, but usually I'm a little sensible and avoid stuff like CLF….

…….and PBR. All the same, I wouldn't be surprised (one day, one day) to see these get crushed. They could remain in a full bull pattern, but even a "easing back" to the trendline could blow 30% to 40% off of these.

I did buy puts in NLY. I usually don't go for such cheap stocks, but this one is pretty alluring.

I've also got puts in APA. It's dangerous, of course, but there's got to be a falling-away from these bands sometime soon.

AAPL had a nice down day, but a GOOG-like event after tomorrow's close would knock these out. We'll see.

I like my BHI puts a lot, not only due to the Bollinger Bands, but also due to that trendline retracement.

XEC is another nutty momentum one. I didn't say I was immune to pursuing these. I just try to keep them from being all my positions!

If CNX fell to sometime like $70, I'd probably close it. But that's still 15 points away.

First Solar (FSLR) is above $300, but I'm staying away. Its pattern is still plausibly bullish. Its cousin, though, SPWR, looks far more vulnerable.

Finally, my holding with GENZ did pretty well today. This pattern continues to shape up.

I will be traveling on business over the next 30 hours from this writing, so posts will be less frequent (and comments near non-existent). Be strong!

With all the oil talk here, one might think the blog should be renamed The Slippery Slope of Hope.

One reader wrote me this morning about DUG, the double-inverse ETF based on the U.S. oil and gas index. What a gem this is! I bought some for my IRA account, since it seems a cool "straight equity" way to play any bearishness in oil (should it ever come……..).

The energy analyst returns! One of Slope's readers, a very experienced energy analyst, has been kind enough to once again pen a guest column. As before, if you'd like me to forward a note or simply your email to the Energy Analyst, just drop me a line. Enjoy!

The next several days are critical for energy, and perhaps the overall market. As mentioned previously, Tuesday April 22 marks the expiration of the May oil futures contract. How the commodity closes could provide important insight whether the next stop is $110 per barrel or $125.

Regardless, oil and the equity markets are at a mutually exclusive break point, in my opinion. Hyperbole, you say. Panic, you say. Consider the following: The last $20 per barrel move in oil has added approximately $150 billion to the nation?s annual energy tab, an amount equal to the highly publicized and much anticipated US tax rebate. The problem is that instead of a new TV, it looks like that check is going to go 100% to the fuel bill. Worse, 50% of these funds leave the country to pay for oil imports, a complete economic drag. The velocity of money is significantly reduced via higher energy costs with very little resultant knock-on economic activity. Bottom-line, for the US consumer, higher energy costs can be zero-sum. Moreover, higher US natural gas prices could cost consumers another $50 billion this year and higher costs for oil, gas and coal WILL result in higher electricity prices over the next year, albeit with a delayed impact.

Note that oil prices are actually on track to average $40 per barrel higher in 2008 versus last year, thus costing consumers $300 billion y/y. Of course, these are all the observable ?direct? costs. Who knows how much the dramatic increases in energy costs results in higher ?indirect? inflation. The point is that there is likely to be much less consumer funds available, particularly for maintaining a household. The change in energy prices will most likely increase the rate of mortgage defaults, as certain homeowners are forced to throw in the towel. It will be interesting to see of the market can continue to rally as the energy impact becomes more pronounced?

The fed faces a significant choice next week. Either cut rates to assist mortgage holders, or fight the oil price increase by keeping firm on rates. Neither prospect is too appealing.

On to oil stocks: One of the purest plays on the higher oil price is Occidental Petroleum (OXY – $85), which this year should produce close to 470,000 barrels per day of high quality and even higher profit margin crude oil. Almost 80% of OXY?s output is oil, with the balance being mainly US natural gas production of 550 million cubic feet (mmcf/d). The company has zero refining (which is a good thing given current poor US margins) and a small chemical arm. At an average oil price of $105 per barrel this year and a gas price of $9, I calculate that OXY could earn $8.50 per share, up a solid 62% from clean, operating earnings of $5.25 per share in 2007. Thus, the stock is now trading at a P/E of 10x 2008 projected EPS. Cash flow could grow an impressive 45% to $11.75 per share versus $8.10 in 2007. Wow! More importantly, I project free cash flow could be over $6 billion this year, or over $7 per share in FCF. Double Wow!. That is after spending $4 billion on growing the business. With only 7% debt-cap, that is a lot of FCF for dividend hikes and stock buybacks (OXY has doubled the dividend over the last five years).

OXY is different from most E&P companies because it has lower capital requirements, which results in much higher FCF, and long life reserves. Reserve life for US oil, which is 75% of total oil reserves, is almost 18 years, which is practically unheard of in the industry. Obviously, if a company runs out of reserves, its earnings and cash flow should be valued less. OXY has long life, which is critical, in my opinion.

OXY is scheduled to report on Wednesday April 24. Consensus is at $1.95. I think they can do closer to $2.00 per share for 1q08. It does not really matter. These are not tech stocks where every penny counts. The point for OXY is that EPS could be up 110% y/y. That is why these stocks are working ? the growth in earnings and cash flow is huge. Moreover, EPS are almost certain to be higher in 2q08 given that the oil price averaged only $97 per barrel in 1q08. As we know, it is up another 20% since then. Look, everyone has their favorite exploration and production stock. APA, CHK DVN, EOG are all great names. My point is that they are already up 30% – 50% this year alone. OXY is up only 10% year-to-date, yet OXY almost has more free cash flow than the other names combined (almost, not quite, but the point is the same).

DISCLAIMER: OXY is an interesting idea, not a recommendation. I own the shares, but I know that if the price of oil collapses, so too will OXY?s stock price. Also, ideas may be worth exactly what one paid for them.