Ugh. This market. Although we can't say we were surprised stocks peeled back today (in light of yesterday's analysis), I suppose in some ways we were hoping to be wrong about our read on the clues we had in hand at the time. On the other hand, we may still be wrong yet... and glad to be so. Today's dip didn't pull the major stock indices under any critical support levels, and we may be able to rekindle the rally yet. I'm not especially hopeful though. Let's just start there today. Got Patience? As the old cliche goes, patience off. Or. maybe it would be more meaningful to incite the wisdom from Rush's Geddy Lee, "If you decide not to choose, you still have made a choice." Not choosing to do anything right now may still be a prudent action to take. Here's the deal. After making doji bars on Wednesday that suggested a pivot was possible, the bears followed through on that threat to the S&P 500 today. Even so, one bad day doesn't make a trend. The market could fall a bit more and still not actually snap the uptrend that started back in the middle of February. The S&P 500's 20-day moving average line at 2066 is an important line in the sand, but at this time I think the convergence of several key lines around 2014 is the make-or-break level. I don't recall the last time we saw so many important lines all hone in at one place. The more lines that converge there, the more meaningful the line becomes. The VIX has as similarly-important ceiling developing at 17.0. The VIX may be able to test that ceiling, but until the VIX actually breaks above 17.0, the market still has a chance of sidestepping a pullback. I didn't say it was a great chance, but it's still a chance. It's not just the recent shape of the S&P 500's chart pointing me in that direction either. A few weeks ago we introduced you to a new kind of chart.... one of the "toys" in my overfilled toy-box of charting capabilities (my unhealthy addiction to data is your gain). That chart was the comparison of any stock or index to its day-to-day progress over the course of the typical year. We also had the ability to plot the average bullish year and the average bearish year. Here's the updated version of that chart. As we suspected would be the case two months ago, March and April have turned out to be very good months in 2016... not just because they're usually good months, but because the market had a lot of catch-up work to do. This year's year-to-date results are now back to slightly better than average. In fact, we're almost up to the average bullish year's year-to-date performance. I don't know how much more room there is to make any gains. Another red flag: The volume behind today's pullback has higher than any single-day volume we've seen on any bullish day since mid-March. A lot of people were getting out of the market on Thursday. It's worth noting the S&P 500 is close to forming an upside-down hammer and/or a gravestone doji on the weekly chart. If we don't make any progress on Friday - or worse, lose ground - we'll have sealed the deal on that bigger-picture bearish hint. The hard part from here is simply exercising patience, seeing if this week's red flags mean anything. We'll know soon enough. Got Oil? Also in yesterday's newsletter we made a point of saying oil shouldn't be viewed or traded as other commodities, since it was disconnected from other commodities for a couple of different reasons. That message was delivered in a bearish context, but that didn't inherently mean we see oil as a bearish play. We just wanted to point out it was no longer in the same boat most other commodities are. That could be a good thing... ... and today, it is. You have to squint to see it on the chart of crude oil below, but it's there - with this week's surge, oil prices have completed something like a cup-and-handle-pattern. You can also see that crude futures are now above the 200-day moving average line (green) for the first time since 2014, before the implosion began. Is this trade-worthy? Maybe. Maybe not. This is the updated look at oil's supply, demand, and production. Once again, I don't see anything here to suggest the supply glut is abating. I can only rectify oil's current bullishness and the oil's apparent oversupply like this - you're better off trading what the market is doing rather than what you think it should be doing. If oil's on the mend, then maybe enough people know something that contrasts with the data we see on the chart above. I think John Monroe over at the Elite Opportunity has a better handle on the trading aspect of crude oil than I do, saying this to EO subscribers today: "... based on yesterday's short-term breakout, it now has every right to achieve the above mentioned price of [removed by editor]. Although it appears fairly clear the price of oil could move much higher now, it's important to consider the fact this month is the first month it has found its way above its 3X3 DMA (blue line) on its monthly chart in quite some time. I bring that up because at any point between now and July, it's entirely possible oil could do one of two things, either find its way back below its 3X3 DMA before re-rallying, which would suggest a potential bottom developing, or simply a resumption of its long-term selloff on its way to new long-term lows once again. At this point, the play is clearly ... ...It's just going to require some caution in the event oil starts to stage volatility on the recent breakout. Meaning, there's still no real signal on the monthly chart to suggest oil has bottomed for good, especially since it will have every right to find itself back below its 3X3 DMA sometime before the Summer." Sorry I had to remove some of the target prices and trading suggestions John served up, but you know why - it wouldn't be fair to Elite Opportunity members to give away all the good stuff. You know how to get the details though. Just sign up for the EO service. You'll be glad you did. Here's how, or cut and paste this link: https://www.smallcapnetwork.com/pages/SCNEO/v1/