IntroView

The employment data, which we parse more fully below, was decent. But, as is the market's wont, expectations got ahead of the reality on the ground. This is a good reminder to beware the ADP report, as it has not coincided very well with the BLS numbers. Overall, however, there appears to be an emerging consensus that the US economy is forging ahead, while most of the other world economies sputter, including Brazil and China. (There is a remarkable picture in the Wall Street Journal today of a mega-ghost city in Inner Mongolia. Imagine several of New York's Co-Op City complexes virtually empty.) In fact, ISM data is showing varying degrees of contraction across Europe, Japan, and Brazil. Still, an emerging solution for the euro zone debt crisis has worked wonders for the equity markets, and we have a new date to circle on the calendar: December 9th. While treaty changes are being called for by Germany, every avenue is being explored to stabilize Europe financially. The markets like the help being offered and considered. Euro zone leaders will have to deliver, though, quickly. Won't it be ironic if the US ends up leading the way forward, as the BRIC countries and Europe falter. We'll take it.
 

Petroleum Markets  
      
The Labor Department reported that the economy added 120k jobs in November and revised September upward to 200k The unemployment rate was also pared to 8.6% from 9% in October. OK, a positive sign and the market took it as such, but those gains were surrendered quickly, as the market "sold the news".Other macro news relative to the European debt crisis, has only been marginally market moving. The IMF announced earlier today that it would be the channel for central bank loans of as much as 200 bn euro to be used in fighting the debt crisis. Coming on top of yesterday's concerted liquidity enhancing action by several central banks, global financial markets were in a buoyant mood. Crude oil has given back the gains off the jobs report, and more. Apparently, today's upbeat data will not carry into the weekend, as participants look for more substantive evidence of recovery.


Petroleum Tech Talk  
 
Prices left inconclusive tracks yesterday, marking time waiting for today's jobs report. With no new high for this leg of the move off the 74.99 low we will keep our bias neutral. Tests below 100.00 though show momentum faltering as does the lack of a convincing challenge to the 103.37 high. Open interest though continues to contract and in a generally up market, suggests that positions are being closed out. Momentum is predicated on new participants so this is also a sign of weakness. Additionally even as prices rise the momentum oscillator has remained fairly flat which is a bearish divergence and while divergences near tops or bottoms can be early warning signs of reversal, they often give false signals, as well. Wait for a break of 103.37 to go long.


Natural Gas      
    
Gas put up a three-week high yesterday, after EIA posted a surprise draw to brimming stocks. Data showed a 1 bcf drop against expectations of an 11 bcf build. Normally, there should have been several weeks of withdrawals by now. But despite structural imbalances, the extended shoulder season, and consequent record storage levels, participants have to look ahead to the coldest months of the year coming up. The calculus must invariably produce a result that demand will be rising. Whether future pulls are large or small is not the issue, rather that a short positions may be imprudent at these levels, we agree. So also, do speculative interests apparently. CFTC reports in its Commitments report that as a group they have reduced short positions considerably. But it remains a crowded trade, and more unwinding could result in higher prices, short term.


Natural Gas Tech Talk
               
Price action yesterday produced another new high for the move off recent lows. Still, even with a surprise draw to stocks, and a Commitments report showing speculative short covering, momentum was insufficient to break resistance at 3.77, so our bias remains neutral until a settlement bests that mark. An upward channel looks to be forming as well, but it is still too early to confirm. So far, today's price activity, while in negative territory, has taken place above the pivot of 3.541, and above the 13-day EMA, which adds to the inconclusive picture. The more time that passes, without piercing resistance the greater the possibility of a counter-trend move, in which case 3.44 should be used to stop length., as 3.77 should for short positions.

source: KilduffReport.Com