ALERT: US LAWMAKERS STRIKE DEAL; BUT WAIT, THERE'S NO THERE, THERE!
 
PETROLEUM MARKET

Praise be! The world is saved! This is what the markets are telling us. Metals are down, stocks are up, the dollar is up and so are basic commodities, particularly crude oil. The market opened last night with a .50 cent gap, and moved 1.85 higher, eventually posting a high at 97.55. While default may have been averted, a downgrade still seems inevitable. S&P said last month that it may cut US' AAA rating if the government fails to come up with a credible plan to reduce the  deficit, and the deal reached by the President and Congressional leaders does not. Nor does it address the entitlement issue or tax reform. They have managed, amidst incredible histrionics, to accomplish very little. The markets will realize this very soon. Passage is far from assured. The dollar s trading within a narrow range with a tendency towards the downside and as initial optimism fades away the focus will soon be shifted back to the weak US economic fundamentals,which are not going to materially change anytime soon. Growth remains sluggish as last week's GDP number painfully chronicled, meaning slowing demand.
 
 
TECH TALK

After posting the 100.62 high, there was a three day deep fall of 5.00, suggesting that the rise from the late June lows has been completed. Resistance at 102.44 is also intact which means the fall from the early May highs near 115.00 has resumed. The bias is to the downside with the market, as of Friday, below the 13-day MA on daily, weekly, and monthly charts. Support at the recent low of 94.95, posted Friday is the first target and will focus on 89.61 as the next objective. If today's enthusiasm gathers momentum, a break of 98.00 will bring 102.44 back into focus, but we think this is unlikely. Keep stops on short positions close to 98.00 but stay with them until then.
 
 
NATURAL GAS

Like the rest of global markets, gas is experiencing its halleluiah moment of the US debt accord. The assumption being that the life of the economy can now advance to broad sunlit uplands, relief bringing demand growth. Well, anyway; prices ended Friday fairly close to where it was just before the recent heat wave hit. Receding heat and growing supply will continue to plague the market, absent the demand growth that is apparently being heralded this morning. Inventories are forecast to surpass 3.8 Tcf at the end of October due to high production rates and a milder summer relative to last year, according to EIA. Fresh data will be released tomorrow. Some evacuated workers were already returning to oil and gas platforms as "Don" passed. Production interruptions only amounted to 6.2% of the Gulf's 7% contribution to total domestic production. Look for the slide to continue once details of the agreement in Washington are fully parsed.
 
 
TECH TALK

Moving further away from 4.612 implies that the 4064-4612 move is over and the move from the 4.983 high has resumed. The bias will be to the downside, today's exogenous influence notwithstanding. A break below 4.064 will open the way through 4.00, a psychological barrier more than anything else. Thereafter, a move down to the familiar congestion zone of 3.60-3.80 is the most logical. Given a likely slope, this may coincide with the start of heating season and may bring on more consolidation. A break then will be viewed very negatively and open the way to 3.255.
 

source: KilduffReport.Com