IntroView
 
Except for those on the run from hurricane Irene, the focus, today, is on the Federal Reserve Chairman and his remarks from Wyoming. The growing consensus, however, is that his remarks will not add up to much. A lack of remaining policy tools, and an expected roll out of a plan by President Obama have Bernanke limited. Most interestingly will be if Bernanke inidcates an implementation of Twist-2, which is a rehash of a program from the 1960s where the Treasury's balance sheet of holdings are reallocated into longer-dated notes and bonds. In order to maintain the equity market gains, of late, he will have to indicate an openess to trying and doing more. The markets endured more turbulence, yesterday, from what appears to have been a flash-crash in Germany. Stock prices plummeted, within minutes, before rebounding. Several rumors were cited for the reason, including a credit downgrade, none of which proved true. Irene's effect could be extensive, as the storm is curtailing the summer vacation season. The after-effect could further exacerbate already gloomy consumer sentiment.

 
Petroleum Markets
 
Volatility was the order of the day yesterday as crude oil tested both ends of a more than $3.00 range...twice! Optimism was pared as initial jobless claims rose +5K to 417K in the week ended August 20th. Later, exuberance returned as it was announced that Uncle Warren Buffet announced a $5B investment in BofA. Bourses were also weighed down by fears that German authorities were looking to impose a ban on short-selling and that German government debt would be downgraded. Both were denied later in the day. Now here comes Irene, which could shut several refineries clustered near New York. Where panic prevailed last week, and it looked like there was no bottom in sight, stock market stabilization and the gold lemmings finally going over the cliff now looks like a bottom has formed. Chairman Bernanke's comments, later today may change all that. Will he or won't he keep the printing presses running? With leading presidential candidates calling for his head, we guess he will keep his comments cloaked in the mysterious Fed-speak, that Greenspan used to employ. With low volume and a narrow range so far, look for trading to be somewhat abbreviated in the run-up to a end-of-summer holiday, the approach of Irene. GDP and consumer sentiment reports, later this morning could seriously roil the markets; so, be careful.


Petroleum Tech Talk
 
We will stay with our neutral stance for the moment as sideways consolidation is characterized by a heaviness, low volume and high volatility. Price action, so far today, has been on either side of the 84.96 pivot, within at narrow range, which shows little conviction be either buyers or sellers. 89.00 resistance remains unbroken though, so our neutrality is slanted to the downside as long as larger fundamental issues remain unaddressed, suggesting deeper declines may be ahead. A break of 79.17 is now required to generate a solid sell signal for a probe towards 70.00. A move higher needs to take out 89.00 resistance and will target a move back to 100.62 resistance, the point from which the current move down broke. Until a break of either side occurs, stay on the sidelines to avoid getting whipsawed.


Natural Gas
 
Gas prices remain mired in what is now a no-man's-land just below 4.00. EIA reported yesterday a build to stocks of 73 bcf, just about on the consensus. Cooler weather ahead should lead to larger builds in subsequent weeks, closing the storage deficit opened by broiling temperatures in the high consumption regions in June and July. High summer may be returning to the Midwest but that may be offset by power outages that may result as Hurricane mauls the densely populated East coast, as it is predicted to do, over the weekend. While much of the commodities complex has seen dramatic swings in both directions over the last several weeks, gas has been largely subdued. Because it is a domestic market in terms of both supply and demand, swings in both currencies and equities tend to have minimal effect on short term prices. For these reasons, opportunities may be limited today, the market offering no compelling reason to either push prices below support or above 4.00 again, until Irene 's or Bernanke's intentions are revealed.


Natural Gas Tech Talk  
 
The head-and-shoulders formation that we had been watching has now morphed into a very orderly triangle. The initial above resistance at 3.95 was met with a quick setback into the base of the triangle and is holding steady. This setback after a breakout in a congestion area is often a precursor for a larger move. The market will need to hold the support trend line at 3.80 to maintain a short term bullish stance, with a rally back above the original breakout level seen as the first confirmation that a short-covering rally is underway. The target from a 3.95 break is, logically, the double top just above 4.10, where the last leg down to support began two weeks ago. We are skeptical about any further upward movement though, as the fundamentals remain overwhelmingly bearish, so such a move should be considered a selling opportunity.

source: KilduffReport.Com