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Weekend Stock Market Analysis

(7/30/05)

The major averages ended basically flat for the week as the price of Crude Oil has started to bounce after finding support near the 57 level (point A).  Future action in the price of Crude Oil may have an affect on the major averages in the weeks ahead.  If the price of Crude Oil were to rally above its previous high in the lower 60's then this could lead to the redevelopment of selling pressure in the major averages.  However if the price of Crude Oil were to fall below the 57 level then this could lead to a drop back to its 200 Day EMA (green line) just above 51 which may have a positive affect on the major averages and allow for them to continue higher in the longer term.  

As we have seen over the past two years the rise or fall in the price of Crude Oil has had an affect on the Dow.  When the price of Crude Oil has rallied (points B to C) this has generally led to a correction in the Dow (points D to E) and when the price of Crude Oil has fallen (points C to B) this has generally led to a rally in the Dow (points E to D).

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