The retrenchment in oil prices is good news for the economy. And, while oil prices and stocks traded similarly in previous months, this action seems to be changing and it's a sign of growing confidence among equity investors.

The third quarter is very close to being over and earnings season will be critical to the bulls. The only major warning we've had so far has been from Intel Corporation (NASDAQ/INTC) and that was about revenues, not earnings. So, we have a backdrop where stocks could run further over the near term and it's probable that corporate earnings will continue with their strong performance in the first half. I say "strong" because the earnings in the first two quarters held up tremendously well considering there was almost no revenue growth.

The investing climate in equities remains fragile. It was only a few weeks ago that sentiment was very negative and the broader market was trending lower. We could get a similar situation after this upcoming earnings season unless the economic data continue to improve. Investors are willing to buy stocks in this market. They only need a reason to do so.

In the large-cap sector of the market, not all stocks are participating. I'd rather buy a Dow stock that's making new 52-week highs than risk going with a large-cap that isn't participating. At the speculative end of the market, gold and silver remain the hottest area for obvious reasons.

One area that's offering some value at this time is in U.S.-listed Chinese shares. These are all risk capital securities, but I think this is a sector where speculators can now be buyers once again. A lot of very good businesses are trading at very reasonable valuations. It's tough to be a buyer of stocks with prices in the doldrums, but then again, the best investment strategy going is almost always to try to buy low and sell high.

I still keep in the back of my mind an expectation that the stock market is operating in a large trading range around Dow 10,000. I would be surprised if the market rallied through to the end of the year. Without more employment and better real estate prices, I don't see how stocks can rally in any sustainable manner. Then again, equity investment is all about betting on the future, not the present. It's a tough market to call. Stock prices could go either way.