IntroView

If nothing else, hopefully the term "euro zone debt crisis" will appear much less often, in our writing, in the coming days and weeks. The euro zone leaders have a plan, and they seem committed, and that is all the markets seem to need to charge ahead. Analysts reviews are mixed, however, as significant details remain, including real dollar commitments from China. With Greece's writedown of 50% of its debt in place, the focus is already turning to Italy... and Spain and Portugal. A quick analysis would indicate that there is still not enough of money for all of this, but now is apparently not the time to concern oneself over this detail. The S&P 500 has taken key upside resistance, and as bad as sentiment was only three weeks ago, it is that positive now. It's a difficult embrace, but with some of the economic data turning up slightly, it may be required.


Petroleum Markets   
     
Crude market participants finally acknowledged several weeks of stockpile drawdowns, but yesterday's surprisingly large build erased almost $4.00 from the day's high. Mounting concerns about Europe's maladies also emboldened sellers. This morning, there seems to be a "grand" plan, as the financial press is calling it, to overcome those woes, but to us it appears to be more of the tend, pretend and muddle through tactics that have characterized the 14 summit meetings over the last 21 months. No matter though, the financial markets are taking solace from it. Asian and European equities, along with the euro an yen have moved higher, taking oil and other basic resources with them. Additionally, there are high hopes for a positive GDP reading in the US, later this morning showing a 2.5% Q3 growth rate, doubling the 1.3% gain in Q2. Pending home sales are also expected to show improvement, as well. In the final analysis though, we fail to see how Europe can avoid higher public sector debt and its attendant drag on GDP growth, or the US can sustain a recovery with nagging unemployment and an overstocked housing market.


Petroleum Tech Talk  
 
Crude oil lost almost $4.00 off its high yesterday, before reversing. Although there was a settlement below the 90.50 area, the point where prices broke above resistance. It was another day of volume well past averages and open interest barely budging. This is the area where bulls and bears are struggling for control with no obvious winner. Today's action has made up half of those losses. The market is hovering just above weekly resistance at 92.57 and today's first resistance at 92.75. There is a clear upward trend channel, the momentum oscillator is up, prices are well above the 13-day EMA and for all of these reasons we will keep our bias for higher. Watch for 94.89, not only would it be a new high for the current move but it is the 50% retracement of the 114.83-74.95 decline.


Natural Gas   
       
Even though another significant storage injection of 87 bcf is expected positive price action is prevailing ,so far. This may be partly due to sympathy with the rallying basic resource commodities consequent to lowering of pressures in Europe, but probably the combination of a potential weather event and the approach of cold over the high consumption regions is raising demand expectations and might tighten an oversupplied market. But longer term forecasts hold that while this winter could be colder than normal, it will probably not be as cold as last winter, when about 2.26 Tcf of gas was pulled from inventory; so do not look for any runaway upside action. For today, the upside will be tied to the EIA report. Coming in lower than expectations would add weight to the weather component, but a larger injection will give bulls pause.


Natural Gas Tech Talk      
          
Length acquired near technical markers should be held for the moment and we will keep our bias for higher. New length should probably only put on if prices again approach the 3.64-3.66 area. Upside resistance has been tested several times near 3.86 and if it continues to hold, weak bulls will begin to get impatient. The market is tracing out a flag formation, whose shape suggests a move lower, so a move higher will be required to generate momentum to keep the move on track.. Any upside should be contained by 4.14, but it would take quite a bit of momentum to get prices up there, but a test of 4.00 is well within the realm of possibility. A break below 3.64 will probably signal a resumption of the decline from the early September highs, towards our eventual target of 3.255.

source: KilduffReport.Com