The market bounced back with a solid week despite the fact that oil prices nearly reached a record-high of $128 a barrel. The price of oil seems to be the biggest dominating factor in holding the market down and preventing it from setting new highs. Oil hit $127.82 a barrel on Friday after Goldman Sachs said prices could continue to rise through the end of the year due to thin supply.

There is a bevy of factors that is influencing the price of oil but it still comes down to supply and demand. With larger countries like China and India getting into the mix the demand has helped push prices to record levels. Who knows when oil will retreat but one thing to keep in mind…Memorial Day marks the start of the summer driving season.

Nonetheless the market did manage to put up some decent numbers. The Dow added 240 points, or 1.9% to close at 12,986. The S&P 500 jumped 2.7%, or 37 points, to finish at 1,425. The Nasdaq was the clear winner though, adding 3.4%, or 83 points to finish at 2,528. For the year, the Nasdaq is down 4.7%, the S&P is down 2.9% while the Dow has cut its losses to 2.1%.

Once again, key resistance lies at 1,450 for the S&P 500, 2,600 for the Nasdaq and 13,500 for the Dow. These levels are becoming increasingly difficult to break and some fear a market “correction” is just around the corner. I can’t say I see a “correction” in the cards near-term but I am keeping an eye on the VIX (16.47, up 0.17).

Rick Rouse
Rick@OptionsMentoring.com

Tags: market anaylsis, market commentary

This entry was posted on Monday, May 19th, 2008 at 5:46 am and is filed under Market Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.