Wait and See ...

The steady rise in oil prices has the market (and a lot of consumers) spooked.  The concern surrounds the drain on consumer discretionary spending and a continuing shrinkage in corporate margins.

The market has also had a pretty good run since late December and is now butting up against some significant resistance.  The chart below is a daily chart of the Russell 2000 which is the US Small Cap Index.  It is an excellent barometer of US economic strength:

It has been in a tight consolidation channel for a little over three weeks.  Also notice the MACD momentum indicator in the top panel.  The momentum has been waning but the Russell refuses to break down.

 I attached a daily chart of Brent North Sea Crude below it.  Today oil finally backed off its relentless run of the last month.  I read some info today that due to political instability in places like Syria, Yemen and Libya, over 1.3 million barrels/day have been taken out of production.

Market internals remain strong.  But we have to acknowledge the fact that higher oil prices are a factor in the present consolidation we are witnessing.  However, I think it's a sign of strength that, in the face of these higher prices, the market refuses to descend into a bona fide correction. 

And remember, the ECB's LTRO is Wednesday.  Will the Russell break out regardless of high oil prices?  Wait and see ...