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    Intermarket: Oil takes a plunge, but S&P 500 should throw it a life-line above $50.00Ross J Burland

    Oil has plunged towards the close this week, dropping back away from $51.65 highs made on 8th June and dumping overnight from $51.58 to $50.21 lows as supply driven sentiment caps the black gold just as the S&P 500 clibms over the key resistance and through April highs.US yields have taken a hit, understandably given the market's shift towards a less hawkish outlook from the Fed with both short-term and 30y US bond yield falling away from the end of May plateaux, circa 2.65 down to 2.48.However, the key focus remains with the dollar. The US dollar is under pressure and has been since the Dec 2015 highs of a little of 100, steadily in decline as the Fed is unable to raise interest rates due to a worsening outlook for the US economy. The DXY has picked up on three occasions this year on dips, the last being at 92.56 at the start of May and lows for this year when oil was capped at $46.78. However, oil continued to rally, as did the dollar to some degree, but oil was driven by a demand based environment in US stocks while the Fed kept painting a rosy picture for the US economy. S&P breaks April's resistace line, oil joins the rideThe S&P managed to break the sticky resistance level at 2099 this week and took oil for the rise along with it while the DXY tanked on the Fed funds rate being pushed lower on sentiment that the Fed will not hike this summer and oil finally managed a break of $50.00 to score fresh highs for the year as mentioned above. As the DXY picks up a bid, oil is tailing back, but a higher level of support for both stocks and worsening sentiment for the DXY should keep oil elevated at the highs of May's bullish channel. 

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