ALERT: WAITING FOR THE OTHER SHOE TO DROP.
 
PETROLEUM MARKET

While usually not finding much to agree on, Mohamed A. El-Erian, Pimco's chief executive, in a Bloomberg TV interview, characterized the consequences of a US default as a, "big, big mess," found President Obama apparently in agreement, as he warned that if the ceiling is not increased before August 2 "deep economic crisis" will face the economy. A downgrade in credit rating or default looms as an outcome of further delay. The run up to new records for gold is certainly a consequence of the uncertainty dominating global markets. Crude oil trading as low as 98.80 before recovering almost a dollar in the overnight session also demonstrates the timidity of market participants to break new ground in the current environment. Yesterday's lower finish highlighted the inability of the market to hold the previous four day's gains. Thin trading and sidelined investors means oil is still looking for a clear direction. While still close to the recent high of 100.19, momentum to push beyond appears to be drying up, for the moment.
 
 
TECH TALK

Daily ranges have been tightening while maintaining fairly good, but slightly waning volume, over the last week. Yesterday saw a lower close for the first time in four sessions, as well as a lower high, suggesting the momentum of the bulls is losing power. The bias has backed into a neutral zone as a consequence. The ascending triangle being etched out is nearing its final stages and without a breakout and somewhat diminished volume shows that bulls and bears are like two tired boxers, just leaning on one another, suggesting no clear trend will emerge. Picking a direction is now, or today anyway, is at best, a guess. Guessing is gambling, not trading.
 

NATURAL GAS

Like the rest of the markets, gas prices seem confined to a fairly tight range until a resolution on the US debt ceiling is struck. Otherwise, the recent heat wave still has participants in its thrall. While prices have responded, of late, to record heat, price patterns are following a familiar script; peaking near mid-June as Northern Hemisphere cooling demand rises, then declining into the fall until heating demand appears. With supplies ample enough to cover meteorological anomalies, including tropical activity do not expect much deviation from historical price movements. One of the elements that has weighed on any significant price advance though, has been constrained economic activity, which has crimped industrial demand and construction activity, particularly in the Western US where most new construction uses gas.
 
 
TECH TALK

The bias today will be mildly to the downside, actually more neutral as long as prices are contained by a range dictated by the uncertainty of a US default or downgrade. The break higher from 4.064 has probably spent itself where momentum ran out at 4.612, taking 4.983 out of play. In the event a reversal does breach that mark, 4.632 and 4.983 becomes possible. A move lower where 4.064 is taken out reignites the potential for a fall to the 3.60-3.80 congestive support and 3.255 beyond.
 

source: KilduffReport.Com