Well, thank God for oil.

The plunge in OIH and related companies was the only thing they kept things decent for me today. My NDX and QQQQ puts – – fat with profits yesterday – – were closed out with a loss, thanks to the explosion higher in those markets. I bailed out of my RUT puts as well, given the ungodly terrifying pattern that has shaped up on an intraday basis. All in all, the day was a wash, but it would have been a disaster were it not for the plunge in oil.

The market's strength pushed complacency and the $VIX down to new 2008 lows. We are approaching the levels seen last Christmas, when the market was extremely strong. It's amazing, but the VIX is half its value from its January peaks. Boy, those were the days, weren't they?

The tinted area of the Russell shown below is, to my eyes, very, very, very dangerous. Friday morning's employment figures will give it some direction, of course. But it could be a disaster.

With all my worrying, someone sent me an email today asking, "whose side are you on?" I'm on the side of profits. I'm on the side of minimizing losses. No one is going to pay me to be a permabear.

One pattern that I've mentioned repeatedly which had formerly given me comfort was $MSH. Well, that neckline got sliced today. I suppose one could nudge the neckline higher, but I really don't like cheating my charts. 

The S&P 100 is butting right up against its Fibonacci retracement level. Of course, it could slice right through this tomorrow, just like the $MSH cut through its neckline today.

Even more perilous is the S&P 500, which is banging up against a variety of technical lines. In addition, most of the Elliott Wave stuff I've been reading has declared 1,410 as a line in the sand for S&P, so this is a very dangerous time for this index too.

Lastly, I beefed up my short positions on China today. I am anticipated a softening in this market soon.

Today was pretty rough for me, both with the indexes zooming higher (in spite of yesterday's miniature victory!) and all kinds of technical troubles here at the office. I sure hope Friday is better on all fronts.

I'm going to be totally quiet for the rest of the day, probably until very late tonight.

The market is ungodly strong. We're having technical problems galore here. So the last thing I have time for is to type musings on a blog. As for my positions, oil is doing fantastic, but I dumped my RUT, QQQQ, and NDX puts at a loss since this market is exploding higher. Feh.

So I'll see you VERY late tonight. Sorry………please consider the graph below a HUGE warning sign; the risk of a breakout is very, very real, and it would be devastating for the bears.

I haven't engaged in the world of academia (thick books, studying, flash cards, tests) in many years, but my Chartered Market Technician test this Friday has compelled me to return to that world. I've got a foot-thick stack of books I've been going through preparing for it. I'm reminded now why I got through college in 2 1/2 years. Studying isn't my cup of tea. I prefer doing.

I was staring at my monitor this morning, not "doing" much of anything, and not knowing what to write, when Slope's intrepid Energy Analyst made a delivery into my electronic in-box. I herewith offer his thoughts…….

There was a modest short covering rally in energy stocks
after the Fed rate cut yesterday as the ?statement? was not as explicitly
hawkish on inflation as some expected. DUG, in particularly, moved lower as the
big-cap names (XOM, CVX and COP) rallied on the close. The reaction by energy
names yesterday was a false move, in my opinion. The sector will open lower
this AM, as XOM missed the consensus forecast by 5% ($2.03 per share versus
estimate of $2.14).

More significantly, XOM?s production volumes were down almost
6% y/y. Media pundits are focusing on the decrease in the company?s refining
earnings y/y, but Wall Street analysts are going to raise more concern over the
production shortfall. The volume numbers were not good, and this has been a
nagging issue for the company. The 19% decline in XOM?s African oil volumes y/y
will be a major source of investor concern, in my view.  Recall that XOM
?missed? on earnings and production in July of 2007 and this set off a major
correction in both XOM?s shares (from almost exactly the same price level) and
the oil sector. A similar move could now unfold. It is not insignificant that
hedge funds begin a new monthly performance period today, having realized big
monthly gains in energy in April.

DUG is already up 3% in pre-market. DUG lagged yesterday
because of the last hour move in XOM, which accounts for 23% of the value of the
ETF. XOM did raise the dividend by a higher than trend 14% yesterday afternoon,
which gave some investors hope of an earnings beat, but another interpretation
may be that it was more of a cover for today?s earnings and volume miss. One
final note: XOM?s results this AM underscore the investment case for OXY, where
EPS were up 137% y/y, versus the obviously more modest 25% increase in XOM
profits y/y. Oil may pause near-term, but OXY represents a much more direct
vehicle to capture the higher longer-term price with much less volume and
refining risk.