ALERT: MARKETS PLUNGE AS GLOOMY SENTIMENT SPREADS.
 
PETROLEUM MARKET

Participants in financial markets around the globe have finally realized what we have been saying for over a year. We see no growing body of incontrovertible evidence of a recovery. Recent political machinations have brought home an even more terrifyingly inconvenient truth; policymakers are at a complete loss in setting the economies of the world on a corrective path. Crude oil was no different yesterday, erasing all of 2011's gains, with a drop of almost $16.00 in just over a week. A, probably the, key piece of data, will come later this morning with the July jobs report. Sentiment appears to be that it will disappoint. Consensus estimates seem to be coalescing around +75k-85k. Anything lower will probably drive prices to the overnight low of 82.87, possibly lower. Coming in on expectations may elicit a "sell the rumor, buy the fact" rally to the 92.00-94.00 area. In the final analysis though, the recent debt ceiling debacle in the US and the spreading debt crisis in Europe, which are at the root of the alarm, will not elevate investor confidence any time soon.
 

TECH TALK

The sharply sloped down channel that had formed on the chart could not contain the price action yesterday as prices dove to 82.87 in overnight trading. Interestingly, the $3.00 recovery has reversed the momentum oscillator, usually a good indicator of trend changes. Still, the market could rally on relief over a good jobs number to the 92.00-94.00 area without substantially changing the chart's orientation. Selling pressure will probably continue, and if it does the psychological barrier at 80.00 should provide some support. A break lower though, measuring the high to low move from recent the recent high of 114.83 to the recent lows at 89.61allows us to project a probable target for this move at 75.40. Not today, of course, but 77.00-77.50 should be seen before the month is out.


NATURAL GAS

The gas market, caught up in the vortex of panic that has gripped global financial markets, settled under 4.00 for the first time in five months. A larger than expected storage build of 44 bcf also weighed on participants, who forcefully expressed their concerns about worldwide economic growth. Inventory data was just the latest bearish force on natural gas, as futures have declined in recent sessions on weather forecasts and weak economic data. The monthly jobs data, to be released later this morning, is not expected to cheer investors' already gloomy assessment of future economic prospects. Weather, overproduction, storage data and rig counts notwithstanding, participants are now focused, like it or not, on the overarching problem, which is that the global economy is in deep trouble, and worse, traditional policy prescriptions are having little effect in changing that view.
 
 
TECH TALK

After yesterday's sell off, the gas chart presents an overwhelmingly bearish picture. The break of 4.064 and the psychologically important mark of 4.00 confirms resumption of the whole decline from early June high of 4.983. So, measuring from that mark, struck in early June to the early July low of 4.064, allows us to project a target of 3.369 measuring from the recent high of 4.612.This mark carries prices to and through a familiar congestion zone from last year at 3.60-3.80. On a reversal, 4.612 must be breached to turn the bias bullish again, but initial resistance at 4.119 should prove fairly stiff, especially under current conditions.

source: KilduffReport.Com