Post Fed Minutes action gave sellers new strength yesterday as the DJI, SP500, and NQ100 all got pounded. Oil rallying helped the bearish chatter with continued belief in Goldman's and T. Boone Picken's predictive powers. Calls for some type of action by Washington to stem the gusher seems to find no ears in an administration tied directly to the oil industry. Of course exactly what could be done is not clear since the only real hammer would be to declare a 'liquidation only' order for all futures contracts by the CFTC and of course pigs fly. Others talk of declining open interest on the current oil rally as signs even the shorts have given up. They are right but neglect to point out however declining open interest on rallies is classically bearish because by it's very nature is topside liquidation, strong longs liquidating to weak shorts.
Stock bears now see this move as vindication of a market overdo for substantial price declines. The bulls have to now face a market without the hope of further Fed action and general lousy economic data. Range bound action will continue to be the backdrop for every over-reaction.
