ALERT: IRELAND JOINS ITALY, PORTUGAL ON DEFAULT WATCH.
 
PETROLEUM MARKET

Oil rose yesterday in an active market that produced an almost $4.00 range top to bottom. Post-settlement prices fell almost a dollar after  Moody's cut of Ireland's credit rating to junk status pressured the euro to the benefit of the dollar. Market sentiment was buoyed as Chinese macroeconomic data momentarily distracted market participants from ongoing debt problems in the Eurozone and the US. Commodities also hitched a ride on the back of a rising US stock market. The tide of untrained professionals crowding into the markets, bolstered by the misleading advertisements of the financial service industry and the puffery of financial journalism strengthens these intellectually vacuous tautologies and increases volatility. This phenomenon exacerbated the tech-bust of a decade ago, the post-Lehman debacle and will in subsequent crashes. They tend to be overly bullish at a stock market peak, and are overconfident regarding profit outlooks. There is typically no widespread desire to hedge risk, and the subsequent bear market comes as a surprise, and a bad one is coming, particularly in commodities where fundamentals must rule, sooner or later, because they are about "real stuff".
 

TECH TALK

The break of 96.75 resistance temporarily puts the intraday bias to the upside. Overall though, the   outlook bearish remains because the larger picture shows the fall from 114.83  still in favor to continue. While the settlement last night was above the daily 13-day EMA, the weekly is still far above. Below 94.74 will flip bias back to the downside for a retest on 89.61 support. The market posted a higher high already today, but without any follow on momentum on fairly good volume suggesting the bulls' conviction may be waning. A convincing break above 102.00 is probably necessary to bring in follow through buying and flip the bias to the upside.  
 
 
NATURAL GAS

The intense heat covering the high consumption regions in the eastern half of the country pushed gas prices higher for the third straight session. However, it is particularly telling that technical resistance remained intact. Also, estimates for tomorrow's storage report are below the five year average of 88 bcf. We think that for the week ending July 8th, EIA will report that 82 bcf was injected. As of last week's report, storage stood at 2.527 Tcf, which while somewhat below last year's level (which was a record), is ample enough to obviate anxiety, especially after the Energy Department raised its forecast for 2011 gas production to 65.39 bcf/day from 64.61 bcf/day, according to its monthly Short Term Energy Outlook, released yesterday. Our feeling is the inexorable march to 4.00 resumes as soon as the thermometer drops.
 
 
TECH TALK

Even though prices rose yesterday, 4.411 resistance remains intact. Higher prices today,so far have not come close either. Prices settled above the 13-day EMA for the first time in weeks and price action today, so far, has been above support at 4.302 which will be disconcerting for market bulls because it suggests that the recovery from 4.064 is still in progress and might continue further. Overall though, the outlook remains bearish with 4.411 resistance intact and the fall from 4.983 should eventually resume. But a breach of that mark will create a bullish bias which targets 4.983. A downside break though will target 3.731 support and pave the way to 3.255 and below.
 

source: KilduffReport.Com