ALERT: BERNANKE REDUX OR THE DOOR STEP TO ARMEGEDDON?
 
PETROLEUM MARKET

Bernanke's remarks on Wednesday were taken by market participants as a signal that more stimuli might be coming. Markets rallied then on the conclusion that further cash injections would flow into capital markets, a consequence of artificially low interest rates and a falling dollar. The Chairman seemed to hedge his position yesterday and markets violently reversed. Did a feckless commentary really do this kind of damage, or was it the realization that Nero had nothing on the irresponsibility of today's policymakers as they play chicken with Armageddon? We think it was the latter, particularly with the tepid economic tone reflected in yesterday's disappointing retail sales data and nagging unemployment reflected by over 400k new claims for jobless benefits. What substantive outcome can come from the global political leadership, trying to address the worsening euro zone debt crisis and ears of U.S. Default that can be good for energy demand growth? Very little from what we have seen, so far.
 
 
TECH TALK

The chart presents as bearish. Overhead resistance remains intact at 102.44, and the close in support at 96.00 convincingly broken.  The market has dropped below both daily and weekly 13-day EMAs. Accelerated momentum may appear if 94.74 is broken on settlement. If markets reverse and settle above 99.42, 102.44 will again be targeted. The current target is the bottom posted in late June, just above 90.00. With fairly good volume, so far today, it is possible that the market could see another round of long liquidation with enough momentum to carry there, but on a summer Friday, highly unlikely. First support comes in today at 93.85, with initial resistance at 96.37, already rejected once at the open of the overnight session.
 

NATURAL GAS

As we thought, once EIA reported our correct estimate of weekly injections at 84 bcf, the market snapped its current streak. The build cut the inventory deficit to last year by 8% to 218 bcf while the gap to the five year average widened by 2%. The subsequent selling extended to 4.252, leaving support at 4.223 intact. While the market did settle lower, lost ground was regained on expectations for more severe heat next week. The ongoing poor fundamental environment though made for fertile selling conditions especially after the four day advance from the three month low of 4.064, posted last Thursday. The unusual backwardation to the September contract demonstrates the inherent strength that should dissipate once the thermometer drops and absent any immediate tropical activity.
 
 
TECH TALK

Lack of follow through selling at last Thursday's three month low of 4.064 looks more and more like a short term bottom, particularly after the quick recovery of lost post-EIA ground yesterday. Intraday besting of 4.411 resistance will make for a mildly upward bias although that mark was not breached on settlement. If that does happen, it will set up a challenge to recent highs at 4.983. In that the current rally is based on short covering rather than new buying, it is corrective in nature and the market still seems on track to challenge 4.00 and then the familiar 3.60-3.80 support zone below.

source: KilduffReport.Com