Markets Flinch... Oil at $100.01

The three major indices all closed near the unchaged mark with Nasdaq being the laggard of the three. For the past week or so, the market seems to be buying time and consolidating in a tight range that's getting tighter by day. A significant move to either direction is anticipated by most traders which may occur as soon as tomorrow.

So which direction will the market choose...

As the price of oil closing above $100 by a penny made breaking news headline on CNBC today, the market had a steep selloff. This swift move to the downside was reminiscent of the fall during the sell off in the early part of January. Bob Pisani reiterated that the buying interest is on light volume once again.

Pre-market headlines included news from European banks, WSJ article on Lehman Bros, and Walmart earnings report. WMT earnings was very positive for the market but couldn't keep the market up into the close. The financial news, meanwhile, sounded like a warning to a much bigger problem that we can't see, but it seemed to be overlooked today. I believe these negative news for the Financials will have a much longer effect on the market than a not-as-bad-as expected earnings from Walmart.

After-market earnings report from HP was fabulous and the stock is up a good 5% in the after-market trading. This should help buoy the market, especially Nasdaq, tomorrow morning. CROX on the other hand, failed to raise guidance and got crushed. We'll see how the traders react to these mixed reports.

Oil, Gold, and all other commodities stayed very strong. These industries have been strong throughout 2007 and are remaining at the top in 2008. Will they be strong enough to withstand another fall in the Financials which will result in the slowdown in the US and possibly the world economy? The demand for the commodities seem unfathomable but I'd expect for these stock prices to at least take a break and trade in a range while the market suffers once more.

CPI numbers are to be reported tomorrow morning. A strong CPI number will be negative for traders as it combines with rising inflation to diminish the necessity of further action from the Fed. However, will a weak CPI number be positive for traders? or will it just destroy the positive sentiment created by the likes of Walmart numbers? We'll find out tomorrow!


Rino Choi
Titans of Wallstreet market columnist