Wednesday, May 2, 2012

Prices Fall on Anemic Growth and Inventory Gains


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Chip Hodge of Manulife Asset Management said it best “Prices should be lower because there’s no shortage of oil and we’re looking at rather anemic economic growth, we’re getting robust builds in supply.” That combined with worsen job numbers put commodity bulls at a disadvantage in Wednesdays session.

Crude oil closed lower due to profit taking on Wednesday as it consolidates some of Tuesday's rally. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If June extends Tuesday's rally, the reaction high crossing at 109.13 is the next upside target. Closes below the 20 day moving average crossing at 103.76 would confirm that a short term top has been posted. If June renews the decline off March's high, the 38% retracement level of the October-March rally crossing at 98.14 is the next downside target. First resistance is Tuesday's high crossing at 106.43. Second resistance is the reaction high crossing at 109.13. First support is the 20 day moving average crossing at 103.76. Second support is April's low crossing at 101.22.

Natural gas closed lower due to profit taking on Wednesday as it consolidated some of the rally off April's low. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If June extends the rally off last week's low, the reaction high crossing at 2.607 is the next upside target. Closes below the 20 day moving average crossing at 2.144 would signal that a short term top has been posted. First resistance is Tuesday's high crossing at 2.385. Second resistance is the reaction high crossing at 2.607. First support is the 20 day moving average crossing at 2.144. Second support is the reaction low crossing at 1.982.

Gold closed lower on Wednesday and the mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI remain neutral to bullish signaling sideways to higher prices are possible near term. Closes above the reaction high crossing at 1699.60 are needed to confirm that a short term low has been posted. If June renews the decline off February's high, the 75% retracement level of the December-February rally crossing at 1595.00 is the next downside target. First resistance is the reaction high crossing at 1681.30. Second resistance is the reaction high crossing at 1699.60. First support is April's low crossing at 1613.00. Second support is the 75% retracement level of the December-February rally crossing at 1595.00.

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