IntroView
 
The markets are not exactly in full embrace of President Obama's jobs speech. Equity futures and energy are lower; gold is relatively stable. The proposals put forward were mostly palatable to Republicans with an emphasis on payroll tax cuts. Other details are less clear such as mortgage refinance assistance. Senator McCain, from hard-hit Arizona, was correct in pointing out that housing is at the root of the economic problems. Of course, you need a job for two years to get a loan these days, so what comes first? The plan is to be paid for, but that is not clear either. How you stimulate with one-hand and cut with othe other should be an interesting trick to see. The end result for the markets is whether or not we can see a clear way forward to growth. Right now, that is hard to see. Downward pressure on equities and industrial commodities is likely to persist, and gold's safe-haven status will grow. Gold has yet to eclipse its inflation adjusted high; that should occur now before long.
 
Finally, we remember, all too well, September 11, 2001. We were in Manhattan that morning and the mournful months, afterward. Our deepest sympathies continue to (and will always) extend to those who lost family members in the attacks. Like so many, we lost many friends and colleagues. We will never forget them, nor what was done to our country that day. If you have not been to lower Manhattan, recently, the rebuilding effort is taking shape, and 1 World Trade Center is already impressive. There is some small solace in that.
 

Petroleum Markets

Unfortunately, President Obama's address to a joint session of Congress last night did not live up to the anticipation and market participants are registering their disappointment by pushing prices lower. The almost $450Bn American Jobs Act, contains precious little of substance that has not been heard before. In fact, the rhetoric sounded familiar and recalled the recent debt ceiling debate, exhorting "millionaires, billionaires and big oil," to pay their "fair share." Still, the market is staying unusually strong, hovering near the midpoint of the $100.00 to $75.00 slide from early August. Macro-economically oriented markets like equities, and oil seem to be taking their cue from the direction of the US dollar which has remained under pressure to the benefit of the euro. US yields have fallen as investors flock to dollar denominated securities at the expense of other sovereign debt issues. Easy, right? Hardly, the problems of the Eurozone and the US are not going away and will eventually eat away at aggregate demand. Until then, be wary of bulls bearing gifts. We see very little on the horizon that points to long-term sustainable growth.
 

Petroleum Tech Talk
 
Crude oil's choppy rebound from 75.71 is still in progress and more upward price action is possible. The move off the recent lows still looks corrective but the near term outlook will remain cautiously neutral as long as 83.20 support holds. A break of 83.20 will now be the first signal of resumption of the break from 114.83 and should target 75.71 and below, suggesting a target of support at 64.23. However, a break of 100.62 resistance will indicate that fall from 114.83 has completed after missing 100% projection target. The consequent upward move will then make the decline look corrective and argues for another high above 114.83, although we think this is a low probability scenario, given the fundamental picture.


Natural Gas
 
Gas took a marginally bullish tone from offsetting elements yesterday. Traders are faced with limited expectations in both directions. Prices are now at or just below the cost of production, and so, they cannot move much lower without closing wells, which limits the downside. Conversely, there are tropical systems brewing, and this is the peak of the season, but they don't look like they're going to cause any immediate threat. Tropical Storm Nate, may grow into a hurricane by the weekend, which will inhibit sellers with some production still sidelined from Tropical Storm Lee, which hit last weekend. Still, there was not enough momentum to settle over the psychologically important 4.00 level. Breaking either-side of the consolidation which is roughly, 3.85-4.10, on settlement, on a Friday, could offer important directional cues for next week, but unless it does, continue to stand aside.


Natural Gas Tech Talk  
 
Gas continues to trade as though a bottom is forming, but if so, it is in the very early stages and trading is inconclusive. Consolidation from 3.78 is still in progress and the intraday bias remains neutral. Yesterday, prices assembled just enough momentum to struggle over the 13-day EMA, by settlement. A move below 3.78 support should extend to 3.731, and move towards the 3.255 low next. On the upside, however, break of 4.13 resistance will suggest that the fall from 4.983 is over and stronger rebound should then be seen to 4.612 and above. Until either event occurs, more medium term range trading will probably dominate. Overall though, we still favor a fall eventually to 3.255.

source: KilduffReport.Com