Phil Flynn: Is BP Too Big To Fail?

Get ready for the latest BP stress test and a new BP thing to worry about. Reuter’s reports that the U.S. Federal Reserve's New York branch has been investigating the exposure of major financial firms to BP to make sure that if BP can't meet the costs of its spill in the Gulf of Mexico, it won't put Wall Street or the world's financial system at risk. Reuters says that the New York fed, after two weeks of reviewing documents and asking banks about their BP exposure, found no systemic risk, and it hasn't asked firms to alter their credit relationships with BP, the sources said. The New York fed and BP officials declined to comment. Banks that trade with BP wouldn't comment publicly. You are entering a new dimension.

The dimension not only of sight and sound but of the mind and imagination, you are entering land and borrowing and illusion of cutting deficits. Beware you have entered the Euro Zone. The oil market seemed to have one eye on the storm had another eye on the Euro. The Euro really saw some pressure during the session as uncertainty about EU member nations ability to pay back debt became an issue. Dow Jones said the euro fell broadly Monday as worries mounted about financial system strains ahead of the expiry of a large scale European Central Bank lending facility later investors fear a liquidity shortfall. The euro fell to a fresh all time low against the Swiss franc and its worst level since November2008 versus the U.K. pound. It's clear now that.....Read the entire article.


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New Video: Does This One Chart Line Spell Doom for the Markets?

Make no mistake about it, last week was a very important week for the stock market. Looking on the weekly equity charts, you will see one of the most powerful Japanese candlestick lines. This one line on the chart indicates that there could be some major problems ahead for the stock market.

In our new video we explain what this line is and how it can play out in the short and longer term time frames. As always our videos are free to watch and there is no need for registration. We would really like to get your feedback on this powerful formation and what you see for the markets ahead.

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Crude Oil Trend Turns in The Bears Favor...Here's Tuesday's Numbers

Crude oil was lower as it extends Monday's decline and is challenging key support marked by the 20 day moving average crossing at 76.44. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term.

Closes below last Wednesday's low crossing at 75.17 would confirm that a short term top has been posted while opening the door for a larger degree decline into early July. If August renews the rally off May's low, the 62% retracement level of May's decline crossing at 82.67 is the next upside target.

First resistance is Monday's high crossing at 79.38
Second resistance is last Monday's high crossing at 79.94

Crude oil's pivot point for Tuesday is 78.45

First support is the 20 day moving average crossing at 76.44
Second support is last Wednesday's low crossing at 75.17

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Natural gas was lower overnight and is breaking out to the downside of last week's trading range. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

Closes below last Tuesday's low crossing at 4.727 would confirm that a short term top has been posted and would open the door for a larger degree decline near term. Closes above the 10 day moving average crossing at 4.900 would temper the near term bearish outlook in the market.

First resistance is the 20 day moving average crossing at 4.873
Second resistance is the 10 day moving average crossing at 4.900

Tuesday's pivot point for natural gas is 4.781

First support is the overnight low crossing at 4.700
Second support is the reaction low crossing at 4.687

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Crude Falls as Chinese Growth Is Seen Slowing, Storm Avoids Gulf Platforms

Crude oil fell the most in more than three weeks amid concern that China’s economy is growing at a slower pace than estimated and forecasts that a tropical storm in the Gulf of Mexico will miss oil producing areas. Oil lost as much as 3.4 percent after the Conference Board corrected its April gauge for the outlook on China’s economy, saying it rose by the smallest amount since November. Tropical Storm Alex make landfall in Mexico July 1 as a hurricane, according to the U.S. National Hurricane Center in Miami.

“It’s been our thesis that China was going to slow and oil was overpriced as a result,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut based procurement adviser. “In the current forecast, it appears the storm is a non event in terms of damage to the Gulf of Mexico.”

Oil for August delivery fell $2.47, or 3.2 percent, to $75.78 a barrel at 9:07 a.m. on the New York Mercantile Exchange. Earlier, crude touched $75.63 a barrel in the biggest one day drop since June 4. It has dropped 4.5 percent this year and 9.5 percent this quarter. Oil also declined as equity markets dropped and the dollar strengthened against the euro, curbing the appeal of commodities as an alternative investment.

Reporter Margot Habiby can be reached at mhabiby@bloomberg.net.


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Crude Oil Bears Take Monday, But are Signals Turning Neutral to Bullish?

Crude oil closed lower due to profit taking on Monday as it consolidated some of last Friday's rally. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If August renews the rally off May's low, the 62% retracement level of last month's decline crossing at 81.13 is the next upside target. Closes below last week's low crossing at 75.17 would confirm that a short term top has been posted. First resistance is today's high crossing at 79.38. Second resistance is last Monday's high crossing at 79.94. First support is the 20 day moving average crossing at 76.30. Second support is last Wednesday's low crossing at 75.17.

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Natural gas closed lower on Monday as it extended this month's decline. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI remain bearish signaling that additional weakness is possible near term. Closes below last Tuesday's low crossing at 4.727 would confirm that a short term top has been posted. Closes above the 10 day moving average crossing at 4.952 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 4.952. Second resistance is the reaction high crossing at 5.249. First support is last Tuesday's low crossing at 4.727. Second support is the reaction low crossing at 4.687.

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The U.S. Dollar closed higher on Monday as it consolidates around the 25% retracement level of the November-June rally crossing at 85.71. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are turning bearish hinting that additional weakness is possible near term. If September renews this month's decline, the 38% retracement level of the November-June rally crossing at 83.83 is the next downside target. Closes above the 20 day moving average crossing at 87.01 would confirm that a short term low has been posted. First resistance is last Wednesday's high crossing at 86.71. Second resistance is the 20 day moving average crossing at 87.01. First support is last Monday's low crossing at 85.36. Second support is the 38% retracement level of the November-June rally crossing at 83.83.

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Gold posted a key reversal down due to profit taking on Monday and the low range close sets the stage for a steady to lower opening on Tuesday. August gold pulled back from a fresh record high today after the rally lost momentum and a stronger dollar pressured the market. Stochastics and the RSI are diverging and are turning neutral hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1235.00 are needed to confirm that a short term top has been posted. If August renews this year's rally into uncharted territory, upside targets will now be hard to project. First resistance is last Monday's high crossing at 1266.50. First support is the 20-day moving average crossing at 1235.00. Second support is last Thursday's low crossing at 1225.20.

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Phil Flynn: Dodge A Bullet

Tropical storm Alex most likely won’t be much of a problem for BP as its track is far south of the spill zone. Now let’s just hope that another storm does not develop. A second tropical wave dissipated and that is good news as it appears that BP may have dodged a bullet and can continue to collect oil and make progress on moving forward with the relief well.

The Wall Street Journal reports that BP said it recovered 22,750 barrels of oil on Saturday yet at the same time they do not expect to complete the relief well until early August. The question is will it work. The Financial Times says that the operation has no precedent at the depth that BP is operating, but a review of similar efforts in shallower waters and the opinion of geologists and petroleum engineers point to a discomforting possibility: the relief well might not work on the first try, leaving open the risk of delays. Delays that could turn out to be worst as hot air in the Atlantic could produce more storms.

Speaking of hot air, the G-20 met over the weekend and the world’s 20 most wealthy nations and their commitment to debt reduction and banking reform may have more influence over oil than the weather. The G-20 said that they plan to follow through on fiscal stimulus and communicating “growth friendly” fiscal consolidation plans for advanced countries that will be implemented going forward. The G-20 says that sound fiscal finances are essential to sustain recovery, provide flexibility to respond to new shocks, ensure the capacity to meet the challenges of aging populations, and avoid leaving future generations with a legacy of deficits and debt. The path of adjustment must be carefully calibrated to sustain the recovery in private demand.

They will commit to reducing debt. The G-20 said that there is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery. There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth. Reflecting this balance, advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016. For the crude oil market the impact from the G-20 is apparent.

It will have as much impact on oil as it does on the euro and the dollar. Oil broke when the dollar broke and the euro rallied leaving it clear today where oil will take its marching orders from. Watch the currencies for the oil direction. And since the currency action will probably be light, it should be a good day to buy the breaks and sell the rallies.

Phil can be reached @ pflynn@pfgbest.com and make sure to catch him every day on the Fox Business Network

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Crude Oil and Natural Gas Commentary For Monday Morning

Crude oil was lower due to profit taking overnight as it consolidates some of last Friday's rally. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term.

Closes below last Wednesday's low crossing at 75.17 are needed to confirm that a short term top has been posted. If August renews the rally off May's low, the 62% retracement level of May's decline crossing at 82.67 is the next upside target.

First resistance is the overnight high crossing at 79.38
Second resistance is last Monday's high crossing at 79.94

Crude oil pivot point for Monday is 77.98

First support is the 20 day moving average crossing at 76.30
Second support is last Wednesday's low crossing at 75.17

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Natural gas was lower overnight as it extends last week's trading range. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

Closes below last Tuesday's low crossing at 4.727 are needed to confirm that a short term top has been posted and would open the door for a larger degree decline near term. Closes above the 10 day moving average crossing at 4.963 would temper the near term bearish outlook in the market.

First resistance is the 10 day moving average crossing at 4.963
Second resistance is the reaction high crossing at 5.249

Monday's pivot point for natural gas is 4.875

First support is last Tuesday's low crossing at 4.727
Second support is the reaction low crossing at 4.687

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Caribbean Storms Strengthen, May Head for Oil Spill

Tropical Storm Alex, the first named storm of the Atlantic hurricane season, moved across Mexico’s Yucatan Peninsula today on a track that would keep it far west and south of the largest oil spill in U.S. history. The storm was forecast to enter the Gulf of Mexico later today and regain whatever strength it lost while over land. The U.S. National Hurricane Center storm track predicts Alex will then curve west toward Mexico City rather than north and east into the worst of the BP Plc oil spill.

“Odds are it is not an issue for the cleanup,” Tom Kines, a meteorologist with AccuWeather Inc., said in a telephone interview today. He said the storm is likely to intensify to a Category 1 hurricane on the five step Saffir-Simpson scale before making its final landfall near Tampico on June 30. Alex, with sustained winds of 40 miles (65 kilometers) per hour, was about 105 miles west of Chetumal and moving west northwest at 12 mph, according to the 8 a.m. advisory from the Miami based center. A tropical storm warning for the coast of Belize and the Yucatan Peninsula’s east coast likely will be discontinued today, it said.

“Some weakening is expected while over land and Alex could become a tropical depression,” the advisory said. The storm is expected to regain strength when it emerges over the southern Gulf of Mexico this afternoon.....Read the entire article.

The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

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Crude Oil Weekly Technical Outlook For Saturday June 26th

Crude oil's retreat was shallow and was contained 75.17. Subsequent rally indicates that rise from 64.23 is not over yet and has resumed. Initial bias remains on the upside and further rise should be seen to 80.53 next. Break will target a retest on 87.15 high. On the downside, though, break of 75.17 will argue that rebound from 64.23 is completed and will turn bias back to the downside for 69.51 support first.

In the bigger picture, the stronger than expected rebound from 64.24 dampened our bearish view and we'll stay neutral first. But still, rise from 64.24 looks corrective in nature and favors another fall after completion. A break of 69.51 support will indicate that rebound from 64.24 is finished and revive the bearish case. That is, whole medium term rise from 33.2 is finished at 87.15, just ahead of 50% retracement of 147.27 to 33.2 at 90.24. In such case, we'd see another fall to 50% retracement of 33.2 to 87.15 at 60.18 at least.

In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Our view is that fall fro 87.15 would develop into the third falling leg of the whole correction from 147.27 and hence, we'd anticipate an eventual break of 33.2 low in the long term as such correction extends.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

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New Video: Do You Know About Market Divergences?

In the market there are two types of market divergences that can occur....a bullish divergence and a bearish divergence. Both of these divergences are important and you need to know how they work and how you can benefit from this knowledge.

In this short educational trading video, we will show you the tools we use to spot market divergences. We will be using the Relative Strength Indicator (RSI) and the Moving Average Convergence Divergence indicator (MACD) which was developed by our friend Gerald Appel.

As always our videos are free to watch and there are no registration requirements. Please feel free to leave a comment on this or any of our other videos.


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