Commodities Firm While Equities Fall

Commodities were generally firm after strong European confidence data and bigger than expected decline in initial jobless claims in the US. WTI crude oil price rebounded strongly and pared most of the losses made over the past 2 days amid USD's weakness. The front month contract surged to as high as 78.89 before closing at 78.36, up +1.78%. Natural gas rallied as gas storage rose less than expected in the US while gold price also climbed higher and settled at 1168.4, up +0.69%.

The US Energy Department reported gas inventory added +28 bcf to 2919 bcf in the week ended July 23. Stocks dropped -94 bcf from the same period last year but remained +239 bcf (+8.9%) above the 5 year average of 2680 bcf. Gas price extended the rally for a 4th day and settled at 4.827, up +2.31%.

The dollar plunged to a 12 week low against the euro as economic data in the US has been mixed but biased to the downside while that in the Eurozone has shown improvement after enduring a tough period. At the same time, concerns over sovereign crisis in peripheral European countries continue to diminish as debt-ridden economies have been actively implementing fiscal consolidations measures and economic indicators have been better-than-expected.

Initial jobless claims slipped -11K to 457K (consensus: 460K) in the week ended July 24. The drop also brought the 4 week moving average down to 452.5K, the lowest since the beginning of May, from 457K. While the reading was better than expected, the sluggish decline signals that the job market is improving very slowly.

Stock markets failed to be stimulated by the jobless claims report as corporate earnings in the consumer sector were uninspiring. Kellogg reported a -15% decline in net income to $302M in the quarter ended July 3. The management also revised down its profit forecast for the year due to cereal recall last month. Black & Decker, a diversified worldwide supplier of tools and solutions with sales mainly in the US, revised down its sale guidance for 2010. DJIA and S&P 500 fell -0.3% and -0.4% respectively.

Focus of the day is US' GDP report. The economy probably grew by an annualized +2.5% q/q in 2Q10, an ease from +2.7% in 1Q10 and +5.6% in 4Q09.

From Oil N' Gold Focus Reports

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Phil Flynn: Coming To America!

Everywhere from around the world, the crudes coming to America, every time that flag’s unfurled
crude is coming to America, got a dream to take it there, it’s coming to America. It’s coming to America and coming to America! Give me your poor, your huddles masses but most of all give me your crude. Crude Imports surged hitting the highest level since August of 2006 leading to a whopper 7.3 million barrel build in US Crude supply. This was a far cry from most analysts’ expectations that were looking for a big drop in supply by thinking that Tropical Storm Bonnie would impact imports in a negative fashion.

I on the other hand did predict a build because as I believed that the storm might have the opposite reaction on Imports and it looks like I was right. In fact according to one report we saw from “Gas Oil and Liquids Daily” supplies in Gulf States jumped a whopping 8.18 million barrels, or 4.6%, to 184.6 million. Regional imports gained 1.73 million bpd, or 32%, to a record 7.21 million. The gain was the largest since Gulf traffic resumed after being slowed by hurricanes Gustav and Ike in 2008. The reason that we saw that big jump in the Gulf Coast may have more to do with the aftermath.....Read the entire article.

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Crude Oil Futures Rise for First Time in a Week as Stocks Climb, Dollar Weakens

Crude oil rose for the first time in a week as the dollar weakened against the euro, boosting the appeal of commodities as an alternative investment. Oil gained as much as 2.5 percent as the dollar fell to a 12 week low against the euro. Unemployment also dropped in Germany, and confidence in Europe’s economy improved. Futures gave up some of the gain as U.S. equities declined. “The oil market is being set by the financial markets,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We’re back to that kind of correlation trade and not paying so much attention to niggly details like rising inventories and rising OPEC production.”

Crude oil for September delivery gained $1.39, or 1.8 percent, to $78.38 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices have risen 24 percent in the past year and are up 3.9 percent this month. The dollar fell against a majority of its most traded counterparts. The euro increased 0.7 percent to $1.3088 in New York. Earlier, it climbed to $1.3107 amid the increased European confidence. The Reuters/Jefferies CRB Index of 19 commodities advanced 1.6 percent to 270.27, the strongest level since May 4. All of the commodities increased. Investment funds appear to be doing “pretty strong buying” of energy commodities, said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. Gasoline rose 1.6 percent and natural gas 2.4 percent as floor trading closed at 2:30 p.m. in New York.....Read the entire article.

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New Video: What Makes a Frustrating Market?

The S&P 500 is turning out to be a conundrum for many professionals and home traders alike. The conflicting information on good earnings, high unemployment, and other factors continue to batter the market. One moment the SP500 is heading for the stars and the next, it's heading to the cellar.

So what's a trader to do?

In our new video, we share with you some steps you can use to help improve your trading in the S&P 500 and other markets. The new video is approximately 3 minutes long and it will show you several key areas and levels that we am looking at.

As always our videos are free to watch and you do not have to register. We would like to see your feedback on how you see the market, as so many traders are becoming frustrated with the lack of real follow through in either direction.


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Crude Oil and Natural Gas Technical Outlook For Thursday Morning

Crude oil was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI have turned bearish signaling that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 76.49 would confirm that a short term top has been posted. If September renews this month's rally, the reaction high crossing at 79.97 is the next upside target.

First resistance is Tuesday's high crossing at 79.69
Second resistance is the reaction high crossing at 79.97

Crude oil pivot point for Thursday morning is 76.88

First support is Wednesday's low crossing at 75.90
Second support is the reaction low crossing at 74.70

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Natural gas was higher overnight as it extends this month's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If September extends this month's rally, the reaction high crossing at 4.945 is the next upside target.

Closes below the 20 day moving average crossing at 4.570 would temper the near term friendly outlook.

First resistance is Wednesday's high crossing at 4.863
Second resistance is the reaction high crossing at 4.945

Natural gas pivot point for Thursday morning is 4.741

First support is the 10 day moving average crossing at 4.600
Second support is the 20 day moving average crossing at 4.570

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Financials, Crude Oil & Gold on the Move

Most traders I have been talking with are feeling the same thing. Something big is brewing for the equities market but most do not want to get heavily involved until there is a clear direction. The broad market has been consolidating for almost 3 months and it’s important to remember that the larger the consolidation the bigger the move.

Also the biggest and best moves come from failed patterns. So is the big head & shoulders pattern on the SP500 which everyone is yelling about (the sky is falling) really going to happen or is this the BIG fake out? Only time will tell, either way no matter which way it goes I will be sure to catch some of it.

Below area few charts pointing out patterns and trends which could provide some opportunity in the coming days or weeks.

XLF – Financial Sector ETF
Financials play a large roll in moving the major indexes so if this reverse head and shoulders patter breaks out to the upside then the indexes should rally and XLF etf could reach its measured move of $16.50.

USO – Crude Oil Fund
Crude oil almost looked like it was going to breakout and mover higher this week but sellers jumped in sending it lower once again. The daily chart shows a large bearish pennant which is known as a continuation pattern. So it looks as though we should see lower prices for oil.

GLD – Gold Bullion ETF
Gold has been sliding lower for several weeks now and it looks to be showing selling exhaustion. The 5th wave down with the volume spike indicates panic selling as investors cannot hold onto those positions any longer and exit. This is a bullish sign for gold. Also we are seeing gold fall deep into a support level along with the 200 day moving average.

Mid-Week Financial, Oil and Gold Trading Conclusion:
In short, the equities market is in limbo until a clear trend is established. If the financial sector breaks out to the upside then we should see a sizable rally. As for oil it looks to be trading in near the middle of its range but is still in a down trend overall. Gold is almost looking ready for a bounce but I am waiting for more confirmation before jumping on the wagon.

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Crude Oil Closes Lower on Additional Profit Taking.....Here's Wednesday Evenings Numbers

Crude oil closed lower due to profit taking on Wednesday as it consolidated some of this month's rally. The mid range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 76.42 would temper the near term friendly outlook. If September renews the rally off this month's low, June's high crossing at 80.82 is the next upside target. First resistance is Tuesday's high crossing at 79.69. Second resistance is June's high crossing at 80.82. First support is the 20 day moving average crossing at 76.42. Second support is the reaction low crossing at 74.40.

Natural gas closed higher on Wednesday as it extended last week's rally. 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 September extends this week's rally, the reaction high crossing at 4.945 is the next upside target. Closes below the 20 day moving average crossing at 4.563 would temper the near term friendly outlook. First resistance is today's high crossing at 4.863. Second resistance is the reaction high crossing at 4.945. First support is the 10 day moving average crossing at 4.581. Second support is the 20 day moving average crossing at 4.563.

The U.S. Dollar closed lower on Wednesday but remains above the 50% retracement level of the November-June rally crossing at 82.15. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bearish signaling that additional weakness is possible near term. If September extends the decline off June's high, the 62% retracement level of the November-June rally crossing at 80.47 is the next downside target. Closes above the 20 day moving average crossing at 83.49 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 82.69. Second resistance is the 20 day moving average crossing at 83.49. First support is Tuesday's low crossing at 81.97. Second support is the 62% retracement level of the November-June rally crossing at 80.47.

Gold closed higher due to short covering on Wednesday as it rebounds off the 50% retracement level of this year's rally crossing at 1158.30. Stochastics and the RSI are bearish hinting that additional weakness is possible near term. If August extends the decline off June's high, the 62% retracement level of the aforementioned decline crossing at 1132.70 is the next downside target. Closes above the 20 day moving average crossing at 1196.40 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1184.90. Second resistance is the 20 day moving average crossing at 1196.40. First support is today's low crossing at 1155.60. Second support is the 62% retracement level of the aforementioned decline crossing at 1132.70.

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Phil Flynn: Fundamentally Flawed

Another failed upside breakout as the global oil market continues to wallow in this endless trading range. As the bull and bear frustrations continue to mount, I have heard traders on both sides of the market that tell me that somehow the markets are wrong and that the fundamentals do not justify the current price. In other words that the market is somehow fundamentally flawed and that the price is out of whack with either your bullish or perhaps bearish reality. Oil bulls are frustrated with the lack of investment that they see in the oil industry and feel we are over estimating the drop in demand.

They point to China and its explosive growth and its growing appetite for oil. They say that the market is not correctly accessing event risk especially with the type of talk coming out of Iran and Israel in recent days especially in the aftermath of European sanctions. The oil bulls say that despite the drop in demand that as the economy continues to recover oil supplies will tighten faster than you think. The latest to express that frustration was noted oil bulls Goldman Sachs who just recently exclaimed that crude oil prices are “significantly” below the level warranted by fundamentals.....Read the entire article.

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Overbought Conditions in Crude Oil Giving Bears the Advantage....Here's Wednesday's Numbers

Crude oil was lower overnight as it extends Tuesday's decline. Stochastics and the RSI are overbought and are turning bearish signaling that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 76.45 would confirm that a short term top has been posted. If September extends this month's rally, the reaction high crossing at 79.97 is the next upside target.

First resistance is Tuesday's high crossing at 79.69
Second resistance is the reaction high crossing at 79.97

Crude oil's pivot point for Wednesday morning is 77.99

First support is Tuesday's low crossing at 76.79
Second support is the 20 day moving average crossing at 76.45

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Natural gas was higher overnight as it consolidates above the 20 day moving average. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

Closes above last Thursday's high crossing at 4.669 are needed to confirm that a short term low has been posted while opening the door for a larger degree rally into early August. Closes below the reaction low crossing at 4.452 would temper the near term friendly outlook.

First resistance is last Thursday's high crossing at 4.669
Second resistance is the reaction high crossing at 4.945

Natural gas pivot point for Wednesday morning is 4.630

First support is the reaction low crossing at 4.452
Second support is this month's low crossing at 4.290

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Conoco's 2nd Quarter Profit Soars, Plans To Sell Entire Lukoil Stake

ConocoPhillips' (COP) second quarter earnings more than quadrupled on higher commodities prices and as its refining business returned to profitability, with results topping expectations. The company also reached an agreement to sell about 40% of its stake in Russian oil giant OAO Lukoil Holdings (LUKOY, LKOH.RS) and unveiled plans to sell all of it by the end of next year, instead of prior plans to just halve it. Conoco agreed to sell the initial part of its 20% stake in Lukoil for $3.44 billion. The deal is set to close in the current quarter. The rest will be sold to either Lukoil or on the open market.

Conoco, the third largest U.S. oil company by market value after Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), is in the midst of a major restructuring program that includes plans for $10 billion in divestitures in an effort to repay debt, a shift from a debt fueled acquisition spree when commodities prices were soaring. It reported a profit of $4.16 billion, or $2.77 a share, up from $900 million, or 57 cents a share, a year earlier. The latest quarter included a net $1.10 a share in gains. Analysts polled by Thomson Reuters forecast earnings of $1.56 a share. Conoco didn't provide revenue figures.

Exploration and production, which accounts for most of the company's profits, saw earnings soar on higher prices, though, as average daily oil and gas production fell 7.5% amid normal field declines and planned maintenance. Conoco's refining business profit also soared as margins strengthened and utilization rates improved. Refiners have benefited as demand for gasoline and diesel began to improve this year, though the sustainability is highly uncertain. Shares closed Tuesday at $54.44 and were inactive premarket. The stock is up 6.6% this year.

From the.....Dow Jones Newswire.

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