IntroView

If the situation was not so serious, the Greek debt saga would be tiresome. The implications for Europe's officialdom continue to reverberate: elections in the Berlin State dealt Angela Merkels government, yet, another profound loss, as German voters express their disdain for the continued bailout of the peripheral countries. We reminded this morning that two-thirds of Germans were opposed to giving up the Deutsche Mark back in 1999. So, it's surprising that an "I Told You So" party has not emerged. President Obamam appears ready to stick to his guns on seeking additional revenue from millionaires and billionaires, while cries of class warfare have gone up from leading Republicans. If the markets get the sense that the latest attempt at stimulus will fail to pass, the waters will get rougher. If we get another 425k+ weekly jobless claims reading on Thursday, the forecasts for the monthly number will turn grim. Also, there is a series of housing data out his week that likely will not lift spirits either. So, happy Monday. We will look for some good news, but it is best to play the equity andd energy markets from the short side, while gold will continue to attract safe-haven investment dollars, on its way to $2200 an ounce.


Petroleum Markets

We shift our focus to the November contract as the October retires tomorrow. The dollar play is again influencing oil prices as the euro wanes to the benefit of the dollar. Wrangling in Europe has brought their debt crisis to the fore, once again. It is not only not going to go away, the malignancy is going to spread. Similarly, the debate will continue to rage in the US over how best to get the domestic economy moving again. The terms of the debate have been set and they are very much like those parameters that described the debt ceiling debate last month. Markets will not like a replay of that debacle. The lack of resolve by the political leadership in both the eurozone and in the US will lead to continued very low growth and high unemployment. Still, the lemmings continue to follow the equity markets, which seem to refuse to accept reality. This is why CFTC registered rising speculative length. Of course this measurement was taken through Tuesday last which was when the high for the week was struck. Doesn't anyone follow open interest any more?
 

Petroleum Tech Talk

Crude oil put up a another lower high on Friday showing a rejection of the recent rally may be underway.The ascending triangle now looks to be a continuation of the decline from 115.00 in May. The move up lacked conviction and price action was choppy, which translates as corrective and the weak momentum is a divergence. Still the "stair-step" of recent rises needs to put up a price below 85.00 to confirm that it has been broken. Open interest, while showing normal migration to the November contract, has shown a daily net decline, which in a rising market means that length is being closed. A break of 85.00, on settlement will suggests that 80.00 is vulnerable and a test of early summer lows, not far behind.


Natural Gas  

The outsized response to an only marginally higher stockpile report on Thursday, shows shorts gathering momentum on Friday, posting three week lows. The October contract tumbled nearly 5.5% in the past two sessions, its biggest two-day drop in four months. The drumbeat behind the drop is the same one that has set the cadence for falling prices from highs earlier in the year; production at record highs and demand sagging in a weak economy. Additionally, summer cooling loads are fading, and Baker Hughes data on Friday showed the gas rig count jumped to an eight-month high. Hardly surprising then that spreads to winter months widened sharply, with the January premium to October moving to 48.1 cents as very mild autumn weather has helped pressure front month contracts, while winter months held better. Wider winter spreads make buying inventory more profitable and could lead to increased injections in the last six weeks left of the stock building season. Ergo, the market should remain on the defensive in the near term.


Natural Gas Tech Talk
       
Gas has now dropped well back into and through its recent consolidation. A rejection of a breakout higher is confirmed by posting another new low today. This statement should mean that further break down is imminent. Prices are again under the 13-day EMA and all price action, so far today, is under today's pivot of 3.832, which points lower. 4.13 resistance left intact on the last run-up favors more downside and an eventual break of 3.78, which means the fall from 4.983 towards the 3.255 low has resumed. The bias then, turns lower again.

source: KilduffReport.Com