Bounce Still Imminent

Oil prices are once again shooting higher. It’s hard to determine yet if this is part of a topping pattern or if prices will continue to move higher. Considering the hard sell off last week, we would tend to lean toward the theory that oil is in the throws of a topping pattern. Meanwhile, though market indices did next to nothing yesterday, a number of small cap stocks were once again popping higher out of their bases. We didn’t find much that was tradable with our own risk guidelines, but the fact that there are some areas of strength returning to the market indicates that selling pressures are easing significantly while the market continues to test support levels. Options traders once again spent the day yesterday buying nearly twice as many puts as they did calls. This overly bearish position by this group of not so lucky traders continues to strongly support the contrarian view that we are at the bottom of the correction.