IntroView

Look for a quiet day follwed by a quiet week, as market participants take a breather from bourses that are relatively unchanged on the year in the US, after heaving wildly throughout. Of course, not all markets have managed such balance, the supposed star economies of the future -- Brazil, India, China -- are all down big for the year. This should signal trouble ahead. The specter that is the US housing market also posted another price decline for October; prices were down 3.4% year-on-year, more than expected. While we have expressed our concern for the first-half of 2012, we are hardly alone, which makes us uncomfortable: consensus views rarely triumph in the financial markets. Although, probably the most crowded trade right now by far is the call by various analysts for individual investors to be owners of large-cap, dividend paying stocks. The effectiveness of the ECB's liquidity injection will need to watched. Stabilization of the euro zone may be exactly the tonic to quash the first-half near-recession calls. Given the size of the crowd, we are going to stay at the party, but stand near the exit. The final Holiday shopping season numbers will be the first determinant of the crowd's acumen.
 

Petroleum Markets     
   
Crude oil prices are holding near unchanged through lightly attended Asian and European sessions. Friday's session concluded with the largest weekly gain in two months. A conclusion that participants were registering approval of some positive US economic data, concern over Iran's increasing bellicosity and rising sectarian conflict in Iraq as US troops depart is probably correct, but the effect was probably amplified by diminished volume. Late Friday, CFTC reported that speculative interest cut length considerably. Whether this was a consequence of accounting or indicative of future direction is hard to parse at this time of year. Moving into 2012, the impetus driving direction will be the perception of the balance between social/cultural changes in or near key producing regions and economic performance in Asia, Europe and the US. Will real or potential supply disruptions in the Levant, be outweighed or exacerbated by demand consequent to reviving or faltering economies of consuming regions? One will be driven by sudden event, the other by thoughtful calculation. This is the genus of the oversimplification contained in the "risk on, risk off" phenomenon.


Petroleum Tech Talk   

Upward momentum continued through Friday's session. So far today, prices are flirting with 100.00, posting that mark early in Asian trading and in Europe's early going, but the previous high of 101.45 has been inviolate so we will keep our stance neutral, for the moment. A settlement above last week's high at 100.23 will target the high of 103.37 from last month. The 92.70 low of Dec. 16th and 92.77 of Dec. 19th may represent a double-bottom heralding that move, but, at the very least, will be fairly strong temporary support. A break below will put key support at 90.52 in jeopardy again. A move above 103.37 will target last Spring's high near 115.00. Significant breaks of important support and resistance this week, should be viewed somewhat skeptically though, given volumes that continue to be light.


Natural Gas          

Gas trading entered the pre-holiday NYMEX session on a mild upswing coming out of the Asian and European sessions on Friday as weak shorts exited. But that particular price action was eventually undermined by familiar concerns about record production and unseasonal weather. The widespread perception holds that the market will remain oversupplied until winter forces the mercury to dip sufficiently to erode the onerous storage overhang. As December passes into memory, the time remaining offers scant hope this will occur. Baker Hughes data does offer some indication that more traditional sources of traditional production may be easing, lower cost shale output continues to make inroads as a larger and larger share of the total. The elements are certainly aligned to produce lower prices. The 3.00 barrier may be difficult to overcome though, as diminished volumes at year end fail to produce the necessary momentum.


Natural Gas Tech Talk   
             
Price action through the overnight markets have approached recent lows, but have not ventured below. As volume holds at lower levels, we will continue with our neutral stance, unless prices pass through our target at 2.996/3,00 is convincingly breached. Beware of a new low through that zone, followed by a higher high than the previous session and an eventual settlement above the target zone. This may be an early warning that the bulls are rousing and the bears are lose their dominant grip. A settlement above our original target of 3.255, now resistance may suggest that the move lower has concluded and now targets 3.44. A move above there may generate enough momentum to reach resistance at 3.77, with an eventual target of 3.993. If however price action moves easily below our 2.996/3.00 target zone, there is no significant support until 2.409. Prudence dictates covering shorts and standing aside for the moment. Wait to see how market reacts at or near 3.00, or how hard 3.255 is taken out to move back in.

source: KilduffReport.Com