We have to give credit to the bulls. Although the odds are stacked against them, they're still swinging, and kept stocks within reach of a breakout today. We're still not cleanly over the hump yet, and may never be with this particular effort. We have to keep an open mind about what could happen and is likely to happen from here, however. We'll do that in a moment. The first thing we want to take care of now is a quick reality check about this steep decline in oil prices. Oil Price Reality Check Is everybody no longer dreading pulling up to the gas pump? I think I've filled up a couple of times for less than $3.00 per gallon now, and hopefully we can all squeeze in one more good top-off before oil prices - and therefore gasoline prices - start to work their way higher again. I know what you may be thinking now... that I'm not seeing the bigger picture of how much trouble oil prices are in, and how much lower they could go before all is said and done. Just so you know, I do get it. Unfortunately (and I think I've mentioned this to you before), I have access to too much data, which can be a blessing and a curse at the same time. Some of the key oil data is part of my overwhelming collection of information, and just for the sake of knowing, I cracked open that data today. It's more than a little curious. Just for the sake of starting the discussion, do you know why oil prices have been sinking? I mean, do you really know? The talking heads on TV are giving us the typical canned answers like too much supply and/or not enough demand. A few people are even suggesting it's a political ploy in order to get voters satisfied with the incumbents heading into elections. I've found evidence of neither, though. The chart below compares the price of crude oil to the nation's crude oil supply and to the nation's crude oil consumption, by week. As they say, read 'em and weep. Consumption is right around the average it's been dancing around since 2009. The supply is also at the lower end of a range it's been in since 2012. Although the supply has been rising the last couple of weeks, it's still well off the peak supply we've seen a couple of times since 2013. So what's all this chatter about the oil glut in the Gulf of Mexico against a backdrop of overproduction of Bakken Shale? Truth be told, there's something to it. That glut has been blown way out of proportion though. Any gluts tend to have a way of working themselves out before they become disruptive. It's just that this one caused a lot of noise before it could be cooled. Don't misunderstand - now that the ball is rolling, it could roll for a while. I've seen some estimates saying oil could fall all the way to $65 before hitting a bottom. Maybe it will. To be clear, however, the supply/demand underpinnings don't merit this steep selloff. What ultimately caused it (and I say this with 100% seriousness) is a combination of a media that was bored and looking for something new to latch onto, and an oil market that had become too complacent about oil's strength. I know that sounds nuts, but I'm telling you, all aspects of all markets are far more random than anyone wants to believe. The herd mentality prevails more often than not, even if the herd mentality seems reasonable and rational. Nevertheless, oil prices are falling now and may well keep falling in the future, just because the market is spooked. This weakness from oil prices wasn't built to last, however, because when all is said and done the supply and demand levels really haven't changed. That's the long way of saying this dip from crude oil is going to be over sooner than later, and sooner than you may think. This dip is also going to be a good buying opportunity for oil stocks even if the precise moment of the rebound is still unclear. OK, movin' on. On the Fence When all was said and done, stocks didn't end up doing much of anything today. The S&P 500 closed about three points lower, trapped squarely between the 100-day moving average line and the 50-day moving average line, and just a bit under a key line in the sad at 1967. Take a look. I don't think this stall is a coincidence. I really have to believe investors are genuinely hesitant here, thinking the rally has come too far, too fast. That hesitation is underscored by the fact that volume was minimal again today. The upside is (and the only upside I can see right now), the VIX is still bearing down on a floor at 16.0. If the VIX breaks under 16.0 it will likely happen when and if the S&P 500 breaks past 1967. That should spark a trade-worthy surge. That's a huge hurdle though.... taller than it seems. I still have to believe stocks need to move a little lower first before moving higher in a meaningful way. I have no real evidence to support my personal thesis though. So what do we do? You know, one of the best lessons I ever learned (the hard way) about trading is, sometimes the best decision you can make is deciding to do nothing until you get a clearer picture. To that end, I thought John Monroe's take on the whole matter showed great insight. Here's what he said in today's newsletter about how we can best determine what's really in store for stocks at this time: "So far on the morning, the major indices are off on the day. We've been saying all along, let's keep a close eye on TLT, the primary ETF tracking the 20 year plus bonds, and the Russell 2000 (RUT), the primary index tracking everything small cap. With that, both of these current defining market components are telling us we could be in for at least some short-term market-wide weakness. I've included a daily chart of TLT here and as you can see, after putting in a fairly significant blow off top on October 15th, the ETF has finally settled just shy of its complete 5/8 retracement level from its September bottom to this month's high. Although it does have every right to move as low as $118 before staging at least some sort of relief rally, it appears the bond tracking ETF could be in the process of doing it already. When you consider how sharp the run-up on the 15th was and you consider the ETF has done absolutely nothing other than move lower up until late last week, it has every right to move higher from current levels now, which I would assume would cause a little nervousness for the equity markets. It will be just how much the ETF retraces its two week selloff that will help us determine if the major indices have bottomed for the year or not. I suspect roughly $XXX [removed by editor] will be the line in the sand, which would be a complete XXX [removed by editor] retracement back to the upside from its October high to last week's low. Meaning, if TLT can manage to start finding a bid again, it will likely run into a significant amount of resistance around that level and if for some reason it fails and breaks down there, or conversely, continues higher right through that level, it's going to give us a good indication of things to come for equities over the next several weeks." John had a lot more to say about it to Elite Opportunity members today, but you get the gist - bonds supposed to be an indicator of what the smart money is doing, and bonds generally run in the opposite direction of stocks. We'll try to keep tabs on both stocks and bonds and how they're playing off of each other, although with our always-full editorial schedule, I make no guarantees. If you really want the deep, ongoing analysis of the market and tips on how to trade it, I'm going to steer you straight to the top - the Elite Opportunity. What you got today was just a small sample of the kind of potent insight EO members get every day. If you like money, you'll love the Elite Opportunity service. Here's how to get a free two-week trial. Or, cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1