THE WEEKEND

Everyone waiting for the news out of Saudi Arabia this weekend and the first bit I found says the Saudi's will increase their daily production form 9 million bpd to 9.7 bpd. OK not bad - lets just wait and see if they have the capability to do it - my guess is that at $135 pr bbl - they already produce as much as they possibly can.

Barron's with their cover story on why the price of oil is/has peaked at/near $135 - don't know if they are correct but this most important peace of information in the article was this:

"The rally has emboldened oil bulls, who argue the world is bumping up against oil-supply constraints, and that demand will rise inexorably, despite sharply higher prices, as the four billion to five billion people in emerging economies like China and India get a taste of the energy-intensive good life, replete with the cars, air conditioners, refrigerators and computers that Americans and Western Europeans have long enjoyed.

Statistics support their view that demand growth is in its infancy in the developing world: U.S. per-capita oil consumption is 25 barrels annually, while Japan uses 14 barrels per person. China's 1.3 billion people consume just two barrels each per year, however, and India's 1.1 billion use less than a barrel a year."

So what happens if/when their life style approaches any where near our's?

Back to the markets, they are oversold as one can see by checking the RSI (2) levels at near 10 on the SPX/DJIA/RUT and 20 on the NAZ/NDX/MID-

The problem- the Volatility indexes no where near the over bought levels we have seen over the past several months at other major market bottoms- (check the charts above).

Note the VIX- barely above the SMA 10;

Another indicator - the number of stocks above on the SPX above their respective 50 SMA- no where near prior recovery levels.

The SPX is stretched pretty far from the 50 SMA - but until the other indicators get similarly stretched I will watch from the sidelines.