As the McClellan Oscillator confirms this rally we should expect the markets to move higher. Rarely does this indicator make new monthly highs and then the market fall flat on it’s face. Usually there is some sort of negative divergence that forms as the indicator prints a lower high while the market moves higher. This is not a guarentee and I’m using the bullish readings of my market timing signal as a confirming indicator.

Add in the fact that oil is 25% off it’s highs which will should give the consumer a much needed break at the pumps and the dollar in what looks to be a bearish rising wedge…all signs are pointing that this rally should continue. There also appears to be a head and shoulders top in USO forming but we’ll need to see the right shoulder form first before this is a real possibility.

I’m not in the camp that a rising dollar is bad for the stock market all of the time…but lately this seems to be the case.

On a personal note, gas in Vancouver has come down a paltry 10 cents to $1.30/liter, so maybe my previous theory of lower oil equating to lower gas prices is erroneous. Seems like somebody is getting the good end of the stick in the petro price games and it’s not Vancouverites.

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