The leap-of-faith rally in commodities is driving this market. So if oil takes a downtick, the market will take a downtick.
I typically don't like a commodity-led rally because that is too reminiscent of what happened in the runup to the great recession.
This rally, however, is about the production cutbacks, not increased demand -- which, frankly, is almost nowhere to be found.
Take this morning's news. We have Glencore (GLCNF) blinking and cutting back zinc production. That's huge. Everyone in the zinc business was waiting for everyone else to blink. Now the cutbacks can happen across the board.
Don't be surprised if we get the long-awaited cutback in iron ore. That metal's gone insanely low, because Vale (VALE), BHP Billiton (BHP) and Rio Tinto (RIO), which basically control the market, have refused to cut back. The zinc production cut could serve as a prelude to that iron ore cutback.
Copper has been climbing -- in part, because Freeport-McMoRan (FCX) has decided to slack production.
And this morning, International Paper (IP) announced it is exiting a coated board business in China. That is a big change for an industry that seemed to think that business in China would grow sky-high.
Realism is setting in. China's not coming back any time soon. If you go over the latest Alcoa quarter, you will feel the same.
Funny, these companies were all over-producing as China's growth rate collapsed. It is easy to reach the conclusion that they will be as wrong, this time, with their cutbacks as they were with their overproduction.
Either way it is good news for stocks that haven't had a moment's respite from the downside for ages.
To be sure, though, it is supply, not demand, that is driving these stocks higher.