ALERT: COMMODITIES FALL AS IMF DOWNGRADES GROWTH FORECASTS AND GOLDMAN TELLS CLIENTS STRONG CHANCE COMMODITY PRICES COULD REVERSE.
 
PETROLEUM MARKET

When a hard-charging commodity bull like Goldman recommends to clients that they take profits on trade they had suggested last December, which had garnered handsome gains you know it will move and it did; dramatically. This also seemed like particularly sage advice after the IMF revised down its growth forecasts for the US, Japan and the UK. The main reason for the downgrade was surging oil prices. In its April World Economic Outlook, the IMF expressed the belief that global economic growth is gaining momentum, the most prominent risk is rising commodity prices. Additionally, the beginnings of consumer resistance at the gasoline pump may be showing up, as EIA chronicled last week, noting that gasoline demand had fallen 1.2% year-on-year. We had been warning since the middle of last week about the possibility of a "trap door" in the market.
 
 
TECH TALK

The trap door we had been warning about swung open yesterday and, top to bottom about $6.00 of profits fell through. The market has rallied off overnight lows but at this point it is difficult to tell if the correction has run its course. The market is still running well ahead of the moving averages which shows its inherent strength, but is well below its pivot point of 110.16 showing weakness in the front of the market. However, the break of 108.70 overnight suggests that a deeper retreat, possibly to 100.00, is possible.
 
 
NATURAL GAS

Gas market participants decided that it was time to take some cash off the table and with the appearance of some cooler forecasts for northern-tier states , yesterday was as good a time as any. Some utility buying near $4.00 helped to support the market, as well. Spring maintenance at nuclear facilities has helped demand a bit with the use of gas-fired units to make up any shortfall. Still, these influences are marginal, at best, until serious cooling demand is still some weeks off. The time of year adds to the weakness of the market's fundamentals and this counter-trend rally should be at as an opportunity to sell. Temperatures turning milder, inventories comfortable and production running at or near record highs will be difficult to overcome.
 
 
TECH TALK

Prices did not even rally far enough to extinguish the active sell signal. Still the market has become oversold and was due for a bounce with the 14 day relative strength index in the low 30s late last week. Most price action so far has been above initial support at 4.083 which shows there is still a little momentum left but once prices dip below that mark 4.00 will be quickly challenged. After that the 3.60-3.80 support zone looms and there will be the critical test for this market.
 

source: KilduffReport.Com