Market Conditions Seem Bleak...

...with the rise of oil to almost $130 a barrel and core inflation rising.

However, I sincerely believe that there are two phenomenon occurring in the market:

(1) The market is trading in ranges. The expectations is for the market to go +/- 3%. Today' the Dow was down about 1.5%, so I expect at least another big down day, and the market will rebound. In general, investors have been flaky, alternating between lots of optimism and instant reaction to any kind of economic news

(2) Rising oil prices is one of those pieces of economic news that investors have been overreacting to. However, it appears that speculators are also happy to trade within ranges, with big oil price spikes resulting typically with big oil price drops. Additionally, I firmly believe rising oil prices should already be built into the market, and so in about a 6 months, this should all even out.

With those two in mind, I am planning to buy both DIA and QQQQ (Dow and Nasdaq ETFs) Call options tomorrow afternoon, when I believe both will be near their low points.