Let's Do the Limbo with Oil

Although there is not necessarily a strict correlation with stocks, it is hard not to at least keep tabs on crude oil's persistent weakness and inability to hold bounces over the last seven weeks or so. Recall back in 2008, for example, how crude super-spiked and then crashed in the back half of the year along with equities, which probably is drilled into the minds of many.

But with crude gapping down again this morning, in front of the FOMC and some important earnings and macro data points this week, stocks are coming in for a soft Monday open as we see how low crude can go before it becomes an issue again. 

The YHOO/VZ deal is being treated as a dud by the tape, and while I see plenty of stocks barely red or even green, the general feel is one of continued consolidation, which means over-trading a day like today is likely to be a mistake. 

As for crude and the energy patch, SLB is holding up remarkably well. However, some of the large integrated energy names like COP CVX XOM are finally, and I mean finally in the case of XOM, cracking for a bit of a price pullback. 

As you can see on the XOM daily chart, below, Exxon is having an explosive 2016 so far. A move back down to $90 before earnings on Friday would be reasonable and may even set up a new long entry provided that this move down in crude is not the making of a new, sustained leg lower.