ALERT: Q2 FUND ASSETS POUR INTO COMMODITIES AT THE EXPENSE OF EQUITIES.
 
PETROLEUM MARKET

Price action on Friday demonstrated with brutal clarity that markets are going to go where they are going to go without regard to whatever analysis produces the opposite result. This was new buying, not short-covering ,by funds across the commodities spectrum in response to a falling dollar. The sharp gains in oil, wheat, copper and gold, simultaneous with equities weak performance probably emanated from a wave of Q2 investment that anticipates a correction in the stock market because of its inability to break higher, despite improving economic data. Oil drew extra support from fears that the war in Libya was starting to inflict lasting damage on the oil sector. Libya's civil war has cut the normal output of 1.6MM bpd  to about 250-300k bpd. But with Europe's debt crisis still unfolding little wonder investors prefer real "stuff" to paper assets.

 
TECH TALK

Crude putting up new highs makes the chart look more and more bullish with each passing day. Now that 113 has been posted and 108.70 support intact the market now targets 114.98. However, the market is becoming increasingly overbought, with RSI's rising. 108.70 need to be broken on settlement to signal the start of a reversal and that is almost $4.00 away and will probably require an event to reverse the momentum and drive the market that far back.. Beware a sharp reversal that could occur without warning, but stay with the trend if already on board.
 
 
NATURAL GAS

Gas slipped lower on Friday marking not only the sixth consecutive session but the second straight weekly decline, as well. The triple play of mild weather, ample supply and negative technicals will be hard to overcome. As we thought 4.00 presented some support, but not before 3.99 was posted in the electronic session. Now that the season of slack demand is upon us, gas is at its most vulnerable point of the year. Season ending stockpile levels look to be well under forecasts after a particularly cold winter over the high consumption regions, but the 1.579 Tcf stored as of April 1st will be difficult to work off, the ubiquitous "spring planting" notwithstanding.
 
 
TECH TALK

The chart now has a decidedly bearish look. Settling below the moving averages as of last Thursday activated a sell signal and price action today, below the support point of  4.045 shows the market's inherent weakness. The market is still on track to reach the 3.60-3.80 support zone sometime this week. There may be some short-covering at or near 4.00 which wouldn't surprise us and should be looked on as a selling opportunity. If however, that zone holds again, the resulting strong base may ignite a significant rally, but if the selling continues through 3.73, 3.00 will be targeted and below that the 2009 low of 2.409.

source: KilduffReport.Com