ALERT: WEAK ECONOMIC DATA, AND MORE TO COME TURNS BACK MARKET BULLS.
 
PETROLEUM MARKET

No matter how it is sliced or diced, commodities are about real "stuff" that consumers and businesses use. If there is dwindling usage the price has got to go down. The economy is slowing there is no doubt about it. That truth is contained in last week's GDP number, yesterday's ISM index and watch car sales today fall off a cliff later this morning. There is no mystery here; people are not buying things so businesses are not making things or providing services. This is the sum and substance in oil's fall since posting the 100.62 high last week. Top to bottom to today's low that is over $6.00 in a week. Add to it the higher borrowing cost that will be imposed by the so-called "bond vigilantes" and the strong dollar that will result and you have oil pries continuing to leak lower. Prices are now approaching levels that prevailed before the "Arab Spring" when everyone was worried about supply disruptions. Now, with Israel even considering negotiations with a starting point of pre-1967 borders, tensions in the region could cool considerably. The lows of late June might be tested before this week is out. .
 

TECH TALK

Resistance at 102.44 intact and 94.74 support broken, shows that the rally off the late June low at 89.61 is over and that mark is retargeted. A break will confirm resumption of the fall from 114.83 and focus on support in the 83.65/85 area. A breach of this support would endorse a move towards the lows of last summer and fall near 77.00. Given the stream of negative data to come this is more than possible, but we will reserve judgment until we see how the market acts near the recent lows just below 90.00. A reversal to the upside would require a convincing break, on settlement, of 100.62, last week's high. This would then confirm that the move from 114.83 to 89.61 is finally concluded.
 
 
NATURAL GAS

Now that there is at least a temporary respite from the debt debacle, participants can focus on familiar topics of weather and supply. Gas traded higher in sympathy with the rest of financial markets since Sunday's announcement of a tentative agreement to raise the U.S. debt ceiling, but reversed course after the ISM report. The market responded negatively to the index which fell  to 50.9 in July from 55.3 in June. Speaking directly to industrial demand for gas, the consequent softness is quite understandable in that constrained economic activity in the manufacturing sector has weighed heavily on prices for some time now. The central portion of the country is still experiencing above normal temperatures, but in the high consumption regions of the East and Midwest milder readings prevail, holding back the demand that will be required to push prices higher. There was some buying yesterday, evidence of a phenomenon that occurs as prices approach the psychologically important 4.00 level. Additionally, Tropical Storm Emily will need close monitoring in coming day and depending on the course it follows, could ignite a short covering rally. Shorts should consider some cover until prices breach 4.00.
 

TECH TALK

Resistance in the 4.30 zone has held so a decline to the recent low of 4.064 remains on track and confirm resumption of the move down from the mid-June high of 4.983. Projecting that move to its recent low to the move down from the most recent high of 4.612 produces a target of 3.693. This will almost break through the familiar support congestion going back to last year of 3.60-3.80 and thus will target 3.255, where a break will bring 3.00 into play rather quickly. On the other hand, a reversal back up and over 4.612 will retarget the old high of 4.983 and focus on resistance at 5.194.
 

source: KilduffReport.Com