So High

Oil at $60 and the Dow finishes at 11613.19 - 4th best all time, and only 29.46 points off the year's high of 11642.65. How quickly things change. A few weeks ago oil was still around $73 and the market was hitting severe headwinds, up one day and down the next.

A month ago when it was still debatable as to which direction oil prices were headed I posted my thoughts on the Dow testing its 2006 highs. Here we are, and I still believe that this rally is setting itself up for a sizable drop off. The run-up in oil prices didn't dent profit growth, I doubt the slump in prices will have the reverse effect. Sans oil not much has fundamentally changed about the economy since a month ago (even the National Federation for the Blind saw the housing slump coming) - so what gives?

If you predict that it will rain tomorrow and you act on that prediction by purchasing a raincoat, when it rains the next day do you buy another one or are you content with the position you took prior to your prediction? Supposedly the market priced all of this in months ago, right? Housing slowdown, commodity slowdown, oil relief...it goes on and on - so why the rally now? When everything goes as scripted it might just be time to worry.