MacroView

Additional positive economic news this morning has the markets on the rise, following gains from yesterday's pronouncements from the FOMC regarding its commitment ot low interest rates for the foreseeable future. The Fed also seemed to hint at a possible QE3 regime. The dollar got hit, and equities and commodities rose. Gold, especially, has seen a return to favor, easing our concerns over our $2200 price target. A short while ago, Durable goods orders were shown to have risen 3% and and weekly job claims, which rise slightly, are well below 400k at 377k. The Fed's decisions and forecasts are a double-edged sword: it is a relief to the markets that they are acting aggressively, and it is disturbing to the markets that the FOMC feels the need to continue to act so aggressively. The Fed Chairman acknowledged that his tool bag is limited, as is the Fed's predictive powers. But the drag on the economy continues to be housing and persistent unemployment. The Greek debt saga trundles on. Amazingly, private bond holders are now, reportedly, being asked to take as much as a 69% haircut on their holdings. The haircut is looking more like a wipe out. Still, since it is voluntary, it will not be a default, and, as we know, no default, no CDS payout. If there is an agreement to this, the back-story will be among 2012's most fascinating reads. With the markets higher, the oldest of Wall Street adages is at work: don't fight the Fed. And we take heed, while remaining leery. It is better to be under invested in these conditions than over invested. The underlying conditions being battled by the Fed and the ECB are formidable.

 
Petroleum Markets

Crude oil prices are rising again, responding to the dollar's fall resulting from Federal Reserve Chairman Bernanke's signal yesterday of the central bank's aim to keep interest rates low for some time to come. Of course, the flip side must be what that says about aggregate demand suggested by such a decision, particularly with Q4's somewhat disappointing corporate earnings so far. Tortuous negotiations over Greece's debt woes continue, representing a directional wild card. US Initial jobless claims and durable goods have registered a positive readings, and we await new home sales and leading indicators that may introduce even more volatility, later this morning. Most importantly though, will be if perceptions subsequently allows for momentum to carry out of the current range the market has been covering repeatedly for several months.


Petroleum Tech Talk     

Price action has carried to the upper portion of the range. The high of the week has been posted already, this session. Yesterday's low has just touched trendline support before bouncing off. Subsequent momentum has carried to 101.00, for a possible test of secondary resistance at 101.98. Settlement lat night was again below the 13-day EMA.A move above the 103.37-74 band might reach congestion near 105 and contain potential for a move to 115. Similarly, a move below this week's lows could target important support at 90.50. The bias stays neutral until either occurs.


Natural Gas            

The market extended the short-covering frenzy yesterday. Without substantive change in the overwhelmingly bearish drivers, this push can not be characterized any other way. How participants react to the storage report, later this morning, may hint at participants' resolve. The range of expectations still admit a widening of the surplus, not only to last year, but averaged over five years, as well. ConocoPhillips and Occidental both announced plans yesterday to idle some production until prices improve, joining Chesapeake, which made a similar announcement Monday; which tarted the market's recent about-face. Certainly, the question of the moment is, how far can this run extend? With storage running close to 20% ahead of last year, and winter on the back stretch, the necessary conclusion must be, not much.


Natural Gas Tech Talk                 

It looks like participants are still reacting to the reversal. But the slope of the upturn is unsustainable. 3.00, should provide fairly stiff resistance. Until there is a meaningful break above, the bias will stay neutral. The weakest shorts have probably been shaken out, particularly as the 13-day EMA was pierced, on settlement, last night. Our former target of 2.409, is now support, and a reversal back down below will shift the bias back to lower for an eventual test of 2.00, and potentially the 2002 low of 1.96. Although the fact that every session this week put up a new high, and successively higher settlements the possibility that a bottom has been place must be considered.

source: KilduffReport.Com