Market watching

As I mentioned a few days ago, the market is watching for signs: oil prices, inflation, the Fed, whatever.
Yesterday, it was oil prices. Today it's Bernanke's first speech to Congress as the Fed chief.

Lower oil = less likelihood of interest rate hikes (to control inflation)
Lower oil = better profit margins for many companies

So the market surged 136 points on a 200+ point trading day.

I am not a particularly technical investor, but this volatility is hard to ignore. Consider the following data points about market volatility.
Feb 06 - 8 out 10 trading days have had ranges >180 points. 3 days closed >100 points change.
Compare that to January - only 4 days had that 180+ point range, and 3 days >100 points
This type of volatility happens at inflection points in the market. According to the analysis I shared a few days ago, every time this has happened in the past 2 years, the market has gone down severely for 3 months.

This time, the lack of market direction is also unique compared to previous inflection points (Oct '05, Apr '05, etc). In the past, a 100+ point down day was immediately followed by a 100+ up day or another volatile down day. This time, days pass before the next 100+ point closing day.
This is a sign of uncertainty. It could mean that the market will go up, and that would counter the past 2 years.

I've mentioned the importance of oil as the major dampening variable on the market for the last 1.5 years. Hence the excitement whenever oil drops.

I don't have an oil crystal ball. Short term factors affecting prices are dollar value, seasons, and supply.
Dollar value - it's been increasing the last 4 months, which pushes prices down
Demand surges in Spring/Summer (andf that blizzard in New York will use up heating oil)
Supply is 100% affected by refineries here and geopolitics (think Iran, Nigeria). This week, oil inventories showed some slack.

The Security council deals with Iran next week. Should be exciting. Iran has been flexing its muscles via proxies - the Danish cartoon anger was 100% stoked by Iran and Syria. (THE ECONOMIST reported that witnesses saw security men with phones directing the mobs.) The message is: Iran has global reach and the ability to cause disruption.
Could Iran afford to stop selling oil? Maybe for a few weeks. They could gamble that short term pain is worth the long term satisfaction of getting the bomb.

It's all speculation, and that's what sends the oil prices up and down.

We don't need to sit on the sidelines while this volatility is occurring. The stocks we want to buy tend to be somewhat buffered by overall market sentiment. Somewhat. A downward trend in the market will still present better buy opportunities.