One thing to watch this summer is price of oil. An oil price spike has been the catalyst to several market reversals in past years and could, should it continue, derail the bull market.
I’m closely monitoring the 26.00 level in the iPath Goldman Sachs Crude Oil Total Return Index (OIL); historically a breakout above this benchmark resistance level has preceded an interim top in the S&P 500 Index (SPX). The OIL monthly chart suggests a test of the 26.00 level is coming up this summer after several months of slowly inching up toward this benchmark.
Under this scenario, a potential repeat of the August-September 1998 mini-bear market would be possible. For now, though, consider that the market’s main trend is up as the bulls still hold sway.