Small Cap Network Blog

I know Hewlett-Packard’s (HPQ) news was good this morning, as was BJ’s Wholesale Club’s (BJ). Neither of those earnings results changes the bad ones we saw yesterday (the ones I referenced in a ‘Market Call’ blog entry). So, don’t get too excited….earnings are still a mixed bag.

I didn’t come here to talk about earnings though - at least not yet. Check back later in the day.

No, I came to talk about the other two big drivers behind the recent market rally…oil and the U.S. dollar. The former has been falling, and the latter has been rising. Both trends are generally good for stocks. And conversely, when both of those trends reverse, it’ll be tough on stocks.

Well, as you might have imagined, I think that’s what we’re about to see.

(There, I’ve just caught you up on about a week’s worth of commentary…literally.)

And where are both of those charts now? Oil is still finding support, and the dollar is still hitting a ceiling. In fact, we saw huge reversal bars (higher highs, lower lows, and a closing level pointed in the opposing direction) yesterday from both chart. A little follow-through today for either chart could clinch a reversal. Ergo, today’s critical.

I’m not going to rehash the specifics - the charts speak for themselves. These are as of yesterday’s (Tuesday’s) close. I’ll update both on Thursday when we get today’s final closing data.

My point, however, was to not get sucked in by today’s good news….there’s a lot of recovery to be made if the market’s going to stave off a pullback.

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