An Overview of a Strange May Market

Well, it happened again. My trading desk is overflowing with random Post-It notes, half-formed opinions and tasty tidbits that fit much better into single paragraphs than full-blown RealMoney columns. So let me rear back and fire a barrage of tidy sound bites to help you decipher the odd landscape of this unusual May market.

Crude oil: Analysts are now telling us why $150 crude oil is good for the stock market. OK, whatever. In reality, skyrocketing commodities will be a deal-breaker for the five-year recovery if it triggers a deep recession, or worse, in coming months. Besides, Wall Street hates uncertainty, and $6 gasoline is sure to yield a steady wave of unintended consequences.

Latin America: Buy, buy and buy more. This part of the world is turning into the hottest zone on the planet, punctuated by the recent announcement of the biggest oil discovery in three decades by Brazil-based Petrobras Brasileiro (PBR - commentary - Cramer's Take). Add in the S&P 500 credit upgrade of the Brazilian exchange, and you have the makings of a major bull market.

Wal-Mart Stores (WMT)

Click here for larger image.

Source: eSignal

Wal-Mart (WMT - commentary - Cramer's Take): Yes, it's well positioned to take advantage of a slowing economy, but the chart shows major overhead supply just above $60. For that reason, I'd take profits aggressively at that level after the retailer recovers from its post-earnings hangover and resumes the rally it started in the low $40s last September.

Tech: If tech is going to rally into the summer, the uptrend needs to expand from primary names such as Apple (AAPL - commentary - Cramer's Take) and Research In Motion (RIMM - commentary - Cramer's Take) and into secondary players that haven't seen major cash inflows yet. Here are three stocks that might benefit when that happens: BMC Software (BMC - commentary - Cramer's Take), Western Digital (WDC - commentary - Cramer's Take) and AT&T (T - commentary - Cramer's Take).

Market volume: You won't convince me this bear market is really over until rally days print two to three times average daily volume on the SPDR Trust (SPY - commentary - Cramer's Take) and Powershares QQQ Trust (QQQQ - commentary - Cramer's Take). Sadly, we haven't had a single volume-sustained rally day since Feb. 7, which was 25 days before the overhyped Bear Stearns (BSC - commentary - Cramer's Take) reversal.

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At the time of publication, Farley had no positions in stocks mentioned, although holdings can change at any time.

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