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Watch These Developments

Careful here....keep an eye on two developments:

1) Forget gold, watch the base metals...copper is down 3.6 percent, and zinc, lead, nickel all down notably in London. They in turn are bringing down material names—miners, steel.

2) The Russell 2000, which has been the leading major index since this leg of the bull run began in September, is underperforming today.

What's the issue? Short-term—profit taking. Metals are not falling apart, and as for mining stocks, BHP Billiton , down 1.6 percent, was at an HISTORIC HIGH last week, so we are far from technical destruction.

However, the S&P has not hit a new high in a couple weeks, and there is some serious resistance at or near 1,330, traders tell me. "Starting to look toppy to me," one trader wrote this morning.

Longer term, there are genuine macro concerns. Remember the reason the S&P 500 is down only 2 percent in the last couple weeks while oil is up 25 percent: many believe the oil rise is temporary. But with Saudi Arabia potentially in play, that could usher in a longer period of oil price instability...and there are plenty of studies out there that show that even a $20 rise in oil will cut at least a half percentage point off GDP growth...if sustained. And if we move over $120...well, it gets worse.

I'll make it simpler, because this is the way traders have been explaining it: a family making 75,000 with 2 cars (an SUV and a regular car) is going to end up spending between $6,000-$7,000 on gas at $4 gallon. That is about 9 percent of that family's pre-tax income.

If you throw in a spike in interest rates...higher rates, higher gas...ugh.

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