IntroView
 
The price failure in gold that we referenced, yesterday, turned into an epic fail. Gold traded down over $100 an ounce, at one point, and losses continue overnight, adding another $40, threatening $1700 -- down almost $200 from the high point. Support is not seen until $1650, and the chart looks extremely bearish, indicating the fall will not end there. Sentiment has changed, during the week. On Monday, big things were thought to be heard out of Friday's Fed confab; now, little is expected. This has helped to break the gold fever for now. Market sentiment will also be impacted by the sudden departure of Steve Jobs, as CEO of Apple Computer (that name sure doesn't fit anymore). Apple, of course, now has a greater market capitalization than ExxonMobil. If Apple sustains the losses posted on the news, all the major indexes will be dragged down with it. It's a difficult sign of the times that such a tremendous accomplishment, an abject value creation story, is made bittersweet by this development. We can all only wish Mr. Jobs well.
 

Petroleum Markets
 
Crude oil prices rose to their highest levels of the session yesterday when the durable goods orders surprisingly jumped in July after contacting a month ago, offering a glimmer of hope that the struggling US economy was reviving. The EIA report ,showing a draw down in crude oil stocks, seemed to echo that sentiment. The market closed lower though as participants acknowledged that the underlying structural issues remain unresolved. The focus will now fall on Jackson Hole, Wyoming where Federal Reserve Chairman Bernanke's much anticipated speech is likely to play a pivotal role for near term price direction across all asset classes. Unfortunately, the market seems to be setting itself up for more disappointment. Participants perceive that the political leadership, on both sides of the Atlantic, is powerless in dealing with current conditions. For crude oil, we see this suggested in the price action, which while rising, maintains a tone of heaviness. I n Europe, politicians decided that the "good life" was an achievable and a legitimate goal of government: a 32-hour workweek in pleasing, stress-free jobs, with early retirement, free healthcare, and long vacations. The US built houses it didn't need. Europe tried to buy a way of life it couldn't afford. It now has 40%, or so, top income tax rates, 20%, or so, value-added tax rates and deficits as far as the eye can see. They just can't squeeze the turnip any more. The markets won't let them.


Petroleum Tech Talk
 
Crude oil's sideways consolidation is characterized by a heaviness and low volumes, so, intraday bias is neutral for the moment. As long as 89.00 resistance holds, deeper declines may be ahead. A break of 79.17 is now required to generate a solid sell signal for another test of 75.71 first. Breaking down from there will signal resumption of the fall from 114.83 targeting the psychological level of 70.00. A move higher needs to take out 89.00 resistance and will suggest a move back to 100.62 resistance, the point from which the current move down broke. Otherwise, we will stay bearish until identifiable upward momentum is generated.


Natural Gas
 
Little earthquake damage, Irene moving up the East coast, temperatures hovering near normal and a still struggling economy leaves the gas market in the imbalanced limbo where it is has been all year, with no respite in sight. Prices have generally stayed within a narrow range all month, specifically 3.90-4.00. There have been brief forays above and below, but for the most part this precarious equilibrium has been preserved. The calculation for market participants will be to determine and quantify the withdrawal of earthquake and storm premium against the discounting of an expected sizable injection when EIA reports on stockpiles, later this morning. Consensus holds that injections of about 72 bcf will be reported, we think it will be a bit less at 68 bcf. A break of either side of that range should provide a significant directional cue. In the final analysis though, until winter heating demand looms, without signs of a supply disruption, rallies are going to be a little harder to come by.


Natural Gas Tech Talk  
 
Intraday bias in Natural gas remains neutral and more consolidations could be seen above the 3.843 temporary low. Using the move of 4.983 to 4.064 as a measure, and calculating from 4.612 , a 100% projection produces a target of 3.692. A break above the 4.143 high from earlier this month is needed to confirm a short term bottoming. Below 3.843 will resume the recent decline towards to 3.692, but more medium term range trading could characterize price action, with major buying expected at the 2011 low of 3.731 from early March. . We still favor a fall eventually to 3.255 and possibly below once 3.692 is taken out.

source: KilduffReport.Com