Oil prices have plunged today in anticipation of a peaceful transition in Egyptian leadership into presumably U.S.-friendly -- and democracy-friendly -- hands, which will quell perceptions of event risks in the oil market.

From a technical perspective, however, the Bull Trap high established on Monday was the oil market's way of winking at us about a potentially friendly resolution. As we speak, perhaps some risk premium is being extracted from the oil market, which should be a positive and supportive development for the equity indices in general and the S&P 500 emini (e-SPH) in particular.

Let's notice that the e-SPH remains perched above key support at 1300-1298 and appears to be consolidating ahead of yet another attempt to push to new highs. If oil prices really start to get hammered, the e-SPH could rocket later in the session -- towards the next optimal target zone of 1320/30.

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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