It is said that above all else, the stock market hates uncertainty. So, when one surveys the current landscape, it becomes clear why stocks have essentially been moving sideways for the past two months (with some arguing that this number should be four and one-half).

The bottom line is that there are great many things for traders to fret about at the present time. And while most are not new, it can sometimes help to identify the key concerns.

First and foremost on the list of worries is oil. While some argue whether oil will be a net positive for the U.S. consumer over time, most analysts now agree that the crash in oil prices is a problem - potentially a big problem - from a global macroeconomic perspective.

U.S. Oil Fund ETF (NYSE: USO) - Weekly

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The biggest concern is that the massive decline isn't just computer trading algo's gone wild, but a reflection of demand, and in turn, an indication that growth is slowing in the big picture.

It is for this reason that most days recently traders have tied their trading to the price of oil. If the macro view is indeed under pressure, then the price of oil is a good leading indicator of what to expect in the future. So, as silly as it seems, oil may hold the future to the next important move in the stock market.

The good news is that it does appear oil is attempting to put in a base from a short-term perspective.

U.S. Oil Fund ETF (NYSE: USO) - Daily

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The bad news is that oil has tried to base/bottom out on four prior occasions since September. Therefore, while stock traders may turn their focus on other issues in the near-term, keeping an eye on the current base attempt in the USO is advised.

Other Causes of Uncertainty

To be sure, oil has been the primary focus of stock trading in 2015. However, in the near-term, there are several other "issues" that could act as a shiny object to A.D.D.-inflicted stock traders. So, let's run them down.

To QE or Not to QE

To repeat, none of the current worries in the stock market are new. Yet at the same time, any of the issues facing traders today can become THE focal point - at any given time.

With the ECB meeting scheduled for tomorrow, the question of "Will they or won't they?" could take center stage. The bottom line here is fairly straightforward as Super Mario has been leading the market to believe that a large-scale, sovereign bond buying program (aka Sovereign QE) will be launched in the near-term.

The problem is that Germany continues to push back against the plan. Just today, German Chancellor Merkel stated that the ECB hasn't yet made a decision on QE and that she doesn't want to see anything damage the economic reforms that have been put in place over the past three years.

There is also talk that the program could be "watered down" and as such, become a disappointment.

The key here is to be at your desk bright and early tomorrow to see whether or not the ECB actually implements a QE plan or merely continues talk about it.

Greece (Yes, Again)

Frankly, if I never write another word about Greece and/or Greek politics, it would be just fine with me. But, the key is that there is an election coming up and the question of whether or not Greece will stay in the Eurozone is on the line.

While the rhetoric from the leading party has been about Greece's desire to uphold the country's commitments and to stay in the EU, the uncertainty over what could happen next continues to be an overhang.

Is the Worm Turning?

The bulls argue that the fundamentals for the stock market remain strong and that the economy is starting to accelerate. However, the vast majority of economic data has come in below expectations of late. Not surprisingly, this has been met with the contention that the economy may be succumbing to the #GrowthSlowing concept. And to hear the bears tell it, this is an ominous sign.

And of Course, Earnings

And finally there is the earnings parade. The bottom line here is that this quarter's reporting season is off to a sluggish start. As such, our furry friends in the bear camp continue to yammer on about the ill effects of crude's rude move and the slowdown occurring in places like Europe and China.

Where Does This Leave Us?

In sum, the current bout of uncertainty has left the stock market in a state of flux and treading water. One look at the chart below really tells the whole story as it appears that investors are uncertain about which way the current consolidation pattern will eventually break.

S&P 500 - Daily

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So, if analysis of the global macro environment is not your bag, it might be best to simply wait and see which way the current "wedge formation" breaks. A meaningful beak of the lower bound, which includes the 150-day and the current uptrend would undoubtedly bring in technical selling. Whereas, a move above 2040-50 could cause the bulls to become more confident. However, it is important to note that the bulls would need to move to a new high in order for any upside move from here to be taken seriously.

So there you have it. Stocks hate uncertainty and there is plenty to be uncertain about at the present time. As such, the action in the coming days should be quite telling.

Turning To This Morning

It's all about oil, the ECB, and China this morning. The good news is that after another bad day yesterday, crude prices are stabilizing this morning. However, it is probably still a good idea to not let the current line in the sand out of your sight. On the ECB front, the big day is tomorrow as all eyes will be on Mario Draghi and his merry band of central bankers. There has been a great deal of discussion about what to expect/not to expect out of this meeting, so the result could easily move markets. In China, stocks rallied strongly after regulators talked nice and suggested they were not, in fact, trying to "talk stocks lower" on Monday (the Shanghai index plunged -7.7% during Monday's session). Finally, while stock futures have not been a good guide to the day's session of late, the early action points to a modest pullback at the open on Wall Street.

Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell...

Major Foreign Markets:
    Japan: -0.50%
    Hong Kong: +1.68%
    Shanghai: +4.76%
    London: +0.54%
    Germany: -0.69%
    France: -0.56%
    Italy: -0.18%
    Spain: -0.57%

Crude Oil Futures: +0.24 to $46.71

Gold: +$8.30 at $1302.50

Dollar: lower against the yen, higher against the euro and pound

10-Year Bond Yield: Currently trading at 1.798%

Stock Indices in U.S. (relative to fair value):
    S&P 500: -2.65
    Dow Jones Industrial Average: -42
    NASDAQ Composite: -4.26

Thought For The Day:

Do not let the shadows of your past darken the doorstep of your future. Forgive and forget. -Author Unkown

Positions in securities mentioned: None

Wishing you green screens and all the best for a great day,

David D. Moenning
President, Chief Investment Officer
Heritage Capital Research
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