Overnight stock futures are red again, and oil is down as well. Is there a bottom in sight? The 38.2% retracement of the current rally is 66.54. The Sept 09 low is 65.05. Other than that there is little support for the current decline. However, all is not lost. There is still a 50/50 chance that the current decline is wave C of a flat correction. If so, the bottom is imminent. On the other hand, it is beginning to appear that the rally from the 7/13/09 low is an ending diagonal triangle with a target of 58.32.
I really have no idea which view will prevail, although I do believe the outcome of the current stock market correction hinges on which way oil goes. If oil continues its decline, then we have to call into question any meaningful rally in stocks. If oil rallies, then stocks should rally too.
One reason I am leaning toward the view that the current decline is wave C of a flat correction, is that the pattern in copper (see the JJC) is almost certainly a flat correction which is nearly complete. The pattern from the January high is 3-3-5. Oil has lagged copper by 0 to 2 days since the beginning of the year. Copper only needs one more low to complete 5 waves down. So we should see a bottom in oil within the next week with at least a 2 to 4 week rally to follow. Once the rally is complete we can evaluate whether or not there is any hope for oil to continue higher to new highs for the year.