ALERT: SOFT US DATA STIRS WORRY OVER GROWTH
 
PETROLEUM MARKET

We heard again yesterday about the equities oil correlation. The Dow is a price weighted index and oil related issues will push up the average, especially when the oil price spikes. It is however a distorted view of the macroeconomy. We call attention to the chart we found on the "Inside Futures" website. As you can see, this relationship can move from a very high degree of correlation to virtually nil in a very short period of time. In trading, certainly, everyone would like to have an edge, but a n attempt to glean a directional cue for crude oil from the movement in equities is extraordinarily unreliable. Be very wary of headlines like, "Oil Higher as Stocks Rally Sharply" and the like. Especially now when crude oil has hit a familiar impasse. The market looks bid, but runs out of momentum quickly. On the downside, sell-offs hit a brick wall and reverse for no apparent reason. Right now everyone knows what everyone else knows. Something fresh of fundamental or technical import will be needed to move the market to its next leg, higher or lower. Coming inventory reports may just do it.
 
 
TECH TALK

Generally speaking, the chart is maintaining its basically sideways movement. Yesterday's price action will show a new high since the decline from over 104.00. Yet, when viewed from the vantage point of the decline from over 114.00 the market still looks vulnerable. For the month of May, a decline of over $11.00 makes a rally on the last day of the month look a bit tepid. prices are down considerably so a one day hike is not of all that much concern. What is  troubling ids that now the offered side of the market appears more sensitive, showing participants are more willing to respond to bullish signals than bearish ones. Resistance comes in again today at 102.87, action over 103.00 is difficult to sustain.


NATURAL GAS

The market is still responding to an unusually early heat wave over the high consumption regions. There are still shorts that need to be cleaned out. Still volume and open interest do not suggest that new length is being opened in significant quantities. The structural imbalances in the market have not changed. Stockpiles and production are particularly high and a week or two of early heat are not going to change that much. Stay with the strategy of selling 4.65 calls. There is plenty of time until expiration.
 
 
TECH TALK

The strong rebound from 4.077 suggests that fall from 4.729 was merely a pull back which has been completed. Yesterday's bar is going to be pointed to as the completion of head and shoulders formation, which a rally above yesterday's high will negate.  Since we do not have our usual chart, we can only show the 20-day moving average which the market is well ahead of, which is bullish. But, with the market dipping below first support at 4.633, upward momentum appears to be running out.

source: KilduffReport.Com