Commodities Continue to Heat Up

Yesterday the broader market rallied and oil consolidated. For those not paying attention to the big picture it is easy to get lost and confused as such situations develop. Those paying attention to volume levels, accumulation, investor sentiment, et al, will see that the picture is quite clear here. After the trend break on Friday, the QQQQ rallied on overly bearish sentiment, taking out stops on newly opened short positions. The rally was uninspired though and weak volume and a poor close indicate that yesterday's strength is likely to give way to weakness today. Oil on the other hand, while not exciting to look at, actually performed extraordinarily well. Prices consolidated near weekly highs in both oil and oil-related stocks. By the end of the day minor profit taking turned out to be merrily a shuffling of positions from weak hands to stronger hands. Prices closed near daily highs in this sector and breakouts and trends stayed in tact across the board.