Is this May 10, 2011 or August 10th, 2011? Where has all of the volume gone? This is one of the lightest trading volume sessions of 2011. As we should all know by now, when the trading volume is very light that will generally favor the upside in the stock market. This afternoon the SPDR S&P 500 Trust(NYSE:SPY) is trading just 69.3 million shares as of 2:45 pm EST. What a joke!
This morning, WTI oil is trading sharply lower by $3.74 to $105.51 a barrel. When the U.S. Dollar rallies higher most commodities will come under some selling pressure. The United States Oil Fund(NYSE:USO) is trading lower by $1.32 to $41.94 a share. Traders can watch the $40.90 area for intra-day support. This is also a likely bounce area for the USO should it trade down to this level.
Gasoline is trading at a new 52 week high this morning. The average price of gasoline at the pump is now $3.91 a gallon. The United States Gasoline Fund(NYSE:UGA) is trading higher this morning by 0.01 cent to $55.75 a share. As long as the U.S. Dollar Index continues to decline lower, gasoline could continue to rally higher.
The markets opened lower with initial weakness in oil. As the morning progressed, oil surged to the upside and the markets followed. Contrary to most retail investors thinking, weak oil is actually bad for the markets while strong oil is good. This is primarily due to the indexes being over weighted with energy and commodity stocks.
This morning the United States Oil Fund(NYSE:USO) has rallied higher from the opening bell. The USO has been under selling pressure over the past few trading sessions. This morning the USO is trading higher by 0.35 cents to $43.10 a share. Short term day traders can watch for intra-day resistance on the USO around the $43.25 area and more around the $43.50 level.
Oil bounced today after dropping sharply the last two days. After topping out around $113.00 per barrel last Friday, oil collapsed into the $105.00 range. This drop over the last two days scared many speculators into selling oil. News hit the market that Goldman Sachs Group, Inc. (NYSE:GS) had told their clients to sell.
We flipped bearish on Friday and shorted oil on Monday.
At www.philstockworld.com you can read "Magnitude 7.1 Monday" and see why we have shorts on both copper and oil. Follow the link below for our specific trades and sign up for our newsletter to get this information BEFORE the market opens.
Watch out for the momentum stocks as well. Our Monday commentary was: