Once a strong trend is in place, it is difficult to trade against it. The Dow Theory states that a trend stays in place until it is broken. A perfect case of this continues to be the oil market, as the basis light sweet crude December futures contract on the New York Mercantile Exchange broke to another record high of $92.22 in Asian trading on Thursday. As discussed in a previous commentary, the days of $100.00 a barrel oil prices suggested by Goldman Sachs earlier in the year may not be that far off.

 The core issues driving up price are supply and geopolitical concerns in the Middle East, specifically with U.S.-Iran tensions mounting. In addition, the Organization of Petroleum Exporting Countries (OPEC) said that it is not in discussions to increase production by 500,000 barrels, as has been speculated in the futures market.

 As I have said in countless commentaries, the high oil prices are a real concern because of their negative impact on transportation companies that have oil as a major part of their expenses. For the economy, the high oil prices translate into higher corporate costs and could impact earnings. For the consumer, high oil prices translate into high gasoline prices. People will tend to drive less and make fewer trips to the malls, which, in turn, impacts retail sales and the economy.

 The near-term technical picture for the December oil continues to be bullish at this time with strong Relative Strength, but the buying has also created an overbought condition on the chart, an indication of potential near-term selling pressure. The December oil is trading above its 20-day and 50-day moving averages of $83.77 and $78.56, respectively, as well as the 200-day moving average at $70.72. The upside target is a pivot point at $92.46 and the 14-day 80% RSI at $95.51.

 In the upcoming sessions, watch to see if the break at $90.00 will hold and drive oil prices higher. My feeling is that the overbought condition could drive some profit taking in the near term to the high $80.00 range. Fundamentals will continue to drive trading.