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Reacting to a dreadful geopolitical background, a pummeling of the Asian markets, and rising oil prices, stocks sold off today losing about 1 percent at the close. In Wall Street’s cold-blooded eyes the only factor you can’t ignore are those that can have an economic impact on our economy. In this regard oil prices and China stand out. There is no doubt that at a certain point rising oil prices would be very bad news for the world’s and the U.S. economy and stock market. But we don’t think we are there yet. Our long-term Master Key, whose sole component is oil prices, stands at minus 45, negative for sure but far short of a minus 80 sell signal. To get such a sell signal oil would have to spike to about $50. Moreover, if the Master Key remains greater than minus 50, the historical record, as documented in “The Oil Factor” indicates that stocks are much more likely to post substantial gains than losses in the next 18 months. Clearly though the turmoil in the Middle East does raise the odds of a spike, our discipline is to give the bull the benefit of the doubt until we do get an actual sell signal.Read more...