This is March, right? Okay, then, I get it. This is March Madness and this, then, is the state of the market these days. I only describe it this way because yesterday was such a surprise. I expected the market would be done, but almost three hundred on the Dow is a bit mad, given the current state of things in the market world.   

  • The S&P 500 has gone 26 sessions without 2 up days in a row. That’s the longest streak since 2001.

If one were to believe in replicating historical cycles, one would be running for the hills right about now, given the piece of data above. Yet, so far today, the market does not seem to be running for the hills. As we all know, though, the day is still young …

It appears as if the Middle East is headed for big-time war against Islamic militancy. We now have at least a dozen countries over there utilizing air and ground power to go after the crazies. More importantly, Shi’ites and Sunnis are working together to combat the crazies, which means the enemy of my enemy is my friend.

  • Crude oil prices rose by around 1 percent on Thursday following news of the Saudi military strikes.

This is good news, although the underlying current is political in that Saudi Arabia and Iran are utilizing the war to gain power and influence in the region, which will be a different problem in the future, but at least the crazies will no longer be an issue if the two countries and the other biggies follow through on destroying ISIS.

For the market, however, negatively affecting the supply of oil over there will have an impact on the global consumers as it will assuredly drive the price of oil back up, yet …

  • Crude oil is dollar-dazed and confused as it tries to determine whether it should focus on current oversupply, the dollar, or the prospect of better demand in Europe after we got more strong data out of Germany.

Aside from the Middle East War against the nutcases, oil is up against a host of intermarket issues that could keep the price down for some time to come. In fact, if the Middle East keeps the current war a “low-grade” war, then the playing out of the Fed and interest rates (think US Dollar) could keep oil prices in a long-term downward trend.

  • The oil complex may have further to fall before entering into a sustainable uptrend. The only bullish date point is the 48% decline in US oil rigs since October 10. However, U.S. crude oil production has continued to steadily rise. At some point production will tail off but based on the latest projections by the EIA the decline expected during Q3 will be shallow and short lived.

So, you see, this market madness is all about the Fed raising rates, the US Dollar, European QE, European economic data, US economic data, China economics, ISIS, Houthis, Yemen, the Gulf of Aden (think choke point for oil shipping), and a global oil glut.

Speaking of US economic data, it could be the market madness deriving from the above is tempering a bit from some good news about the US services sector.

  • Financial data firm Markit said its preliminary or “flash” Purchasing Managers Index for the service sector rose to 58.6 in March, the highest reading since September, from 57.1 in February.
  • Services industry employment growth increased at its fastest pace in nine months in March.

I know I repeat myself in my writing about the market, but, as Shakespeare said, and I paraphrase, “There are no original themes. When we write, we just recycle all the basic human themes.” Since the Market R US, then, we are bound to repeat the same themes, so, here goes …

In the end, March will disappear, and with it will go the madness (or sometime soon thereafter, say June when the Fed actually raises rates), and what will be left for the market to consider are the fundamentals, which, in the end, along with corporate profits, are the only sane consideration for the market. So, let’s wait and see what that reporting brings.

For your edification, chek out …

The Taxman Cometh – Stay A Step Ahead

Trade in the day; invest in your life …

Trader Ed