whiplash today. had some strong bounces in energy and other cyclical plays, but that slowed down the broader market, which was up on weak oil this morning.
does the market want strong or weak oil? obviously, high oil is inflationary and serves as a tax on business and the consumer, but the market has continually rallied as energy prices have gone up. that correlation has been in place for years and still seems to hold despite the growing concern over the fallout of record high prices.
i suspect that a lot of folks are being caught off guard by how well this market is acting, and that is helping to feed the upside. bears are scrambling to cover shorts, and the underinvested bulls are looking for more long exposure.
is a severe pullback forthcoming? i don't know. some say it is coming. traders are sticking with the pockets of strong momentum, like the bulk shippers, although some of the other strong groups, like solar energy, are quite choppy today.