IntroView

Equity markets are rebounding smartly this morning, as the familiar push-pull of euro zone staggering and stammering effects markets. Today, it is for the positive. Euro zone leaders are said to agree on codifying budget strictures for all member countries. This will supposedly give the ECB cover to go all in on bailing out faltering states. Already, however, the German ECB representative is balking. More of the same. Coming to the rescue, however, were pepper-spray wielding US consumers, who came out in droves to buy every marked-down item available on store shelves. With near-10 percent unemployment, this is an almost metaphysical development. But, will it or can it last throughout the balance of the season? It would seem unlikely, as does the ebullience over the latest out of Europe. It's fine to let the good times roll, but investors should not allow themselves to get rolled. Any euro zone codification of austerity will require assent of all members -- remember Slovakia! And the structutral elements of the damaged US economy -- housing and employment -- remain far from resolved. In keeping with the season, we would keep the bullish sentiment on lay-away.


Petroleum Markets        

It looks like holiday cheer has spread from the US, across Asia and into Europe as commodities, and all sectors of equities have risen sharply overnight. "Black Friday" in the US looks to have been an unparallelled success as consumers opened their wallets to spend to a record for the important retail date. Changes in governments across Europe have apparently calmed fears of an EU recession or breakup. Not for the OECD though which still warned of it, nor for us. For crude oil in particular, market bulls were apparently also motivated by stirring geopolitical concerns that imply the potential for supply disruptions as the Arab League imposed sanctions on Syria and the future of Iranian supply remains clouded as controversy over their attempt at building a nuclear arsenal builds. Participants should approach today's rally with a healthy degree of skepticism, we do. It is hard to conceive a reversal in consumer fortunes with unemployment still naggingly high. Similarly, while it seems the EU policymakers and populations are going to embrace austerity, how this is good for GDP growth and energy demand. Be cautious.


Petroleum Tech Talk   

The market was tracing a congestion zone, with a downward bias through Friday. Today's price action has broken above the 13-day EMA again. Momentum appears to wane above 100.00 though, even as the market put up a 100.74 high earlier this morning. Settlement tonight will be key. A mark over 100.00 will suggest that the rally off 74.95 continues and targets the recent high at 103.35, but settling below, implies that congestion continues with a marked downside bias. We will therefor keep our bias neutral. Major support is at 94.50 and, if breached, the breakout point for the last leg higher at 90.52 could be vulnerable.


Natural Gas          

Even though pre-holiday trade was thin on Friday, demand expectations for the weekend low and moderate weather descended over the high consumption regions, prices pushed higher. They are higher again today, so far, as well. The simple fact is that even though the shoulder season extended well past historical norms, winter demand is just around the corner. In fact, the thermometer is set to drop for the Midwest and Southern states from November 30 to December 4. Prices also drew support from Wednesday's storage data, which showed a smaller-than-expected injections of only 9 bcf against expectations for a 17 bcf increase. Additionally, Baker Hughes said that the number of active rigs fell to the lowest level since January 2010. so it looks like the seasonal low is in place, and the technical perspective also favors higher prices.


Natural Gas Tech Talk                

With expiration today, our focus will now shift to the January contract. The rebound from 3.285 has now extended further, but our bias will remain neutral until a settlement breach of 3.978 resistance, which is close to 38.2% retracement of 4.983 to 3.285 at 3.934. On the downside, below 3.415 minor support will suggest that such recovery is finished and will flip bias back to the downside for retesting 3.285 support. A break above resistance will put psychological resistance at 4.00 easily within striking distance and a test of mid-October highs near 4.10. A downside break of support will put 3.255 in the crosshairs again with an ultimate target of 3.00, psychological support. There is a discernible up channel forming and it should extend but for today, fading near highs may work, but do not hold those shorts if market breaks new higher ground.

source: KilduffReport.Com