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The Inside Keys To Today's Market Action

|Includes: SPDR S&P 500 Trust ETF (SPY)

 The markets are jumping higher today on the back of a commodity pull back. Oil is dropping slightly on the day as it appears Moammar Gadhafi is on the retreat. Not only has the U.N been meeting about a possible no fly zone over Libya but rumors have surfaced that the Gadhafi is trying to negotiate an exit from Libya with the opposition. As of now, the rest of the Middle East is relatively quiet.  Oil is lower on the day with the United States Oil Fund LP (NYSE:USO) trading at $41.98, -0.39 (-0.92%). As is common knowledge, a lower oil price is viewed by the markets as being better for the economy. Should oil prices reverse higher, the markets would most likely start to sell off.

Other commodities are starting to pull back. Gold and silver, which are viewed as safe investments during times of unrest are dropping today. This coincides with oils retreat as fears are subsiding slightly. The SPDR Gold Trust (NYSE:GLD) is at $139.08, -0.64 (-0.46%) while the iShares Silver Trust (NYSE:SLV) is at $34.91, -0.32 (-0.91%).

It appears the two driving forces in the market are oil prices and addition or lack of quantitative easing. The markets are reacting to oil and its moves but also realize the drug which has been keeping the market near a 100% gain since March 2009 is about to end. This drug was the Federal Reserve policy of printing trillions of dollars and flooding the markets with them. The end to quantitative easing will be like a drug addict, taken off their drugs. Not a pretty sight. The markets are starting to realize the end is coming to free money and getting nervous.

Related: SPDR S&P 500 ETF (NYSE:SPY)

Gareth Soloway