It’s Round Two for Technical verses Fundamental forces in the Equity Markets

Just a few weeks ago, we addressed the often controversial topic of which analytic tactic would drive Equity markets, Technical chartists or fundamental, good old economists.  It is now round two in the debate given the state of the major US Stock Indexes.  Over the past month or so, chart patterns depicted a bullish break out for the Dow, S&P and NASDAQ and price activity supported the technical outlook as the Indexes gained a few percent.  However, Stocks have run into a bit of selling over the past few sessions and are teetering on posting more losses.

So what’s the albatross to the once perfect bull scenario depicted by charts?  It’s that bad old commodity referred to as black gold.  The fundamental implication for corporate earnings and general economic activity given a $125 a barrel price of oil is not good.  So which will win? The angry bears unleashed by Oil or the quirky bulls driven by charts.  The answer will be seen soon.  If Crude can somehow drop a few $s a barrel, Equities can survive, but another couple of days above $125 could just break the chartists backs.