The S&P 500 Went South....Did You Cash in Your Chips?

For some time now we have been concerned about the lack of upside momentum and the divergences that have been building in many key oscillators. We were also concerned that we'd reached a very important Fibonacci level which we pointed out in a recent video.

It never ceases to amaze me how these levels have worked both in the past and in the present. If you're serious about the markets, you must pay attention to these key levels as many professional traders do, and perhaps you will understand why.

In today's short video, we're looking at the S&P 500 and some of the downside targets we have scoped out using a very simple tool. We had a nice run on the upside based on our "Trade Triangle" technology and we are happy to cash in our chips and watch from the sidelines for the time being.

Click here to watch The S&P 500 Went South....Did You Cash in Your Chips? and as always you can watch our videos without registration and there are no fees involved. Please feel free to leave a comment and let us and our readers know what you think is the direction the markets are headed.




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Crude Oil Daily Technical Outlook Wednesday Morning

Crude oil dropped sharply to as low as 81.85 so far and further decline would still be seen to 80.53/81.29 support zone. Note that as long as this 80.53/81.29 support zone holds, we're still treating price actions from 87.09 as consolidations in the larger rally only. Above 83.48 minor resistance will indicate that fall from 87.15 is completed and will flip intraday bias back to the upside for retesting this retesting. However, decisive break of 80.53 will argue that whole rise from 69.05 is completed with a double top reversal pattern (87.05, 87.15) and will turn outlook bearish for deeper decline

In the bigger picture, medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.



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Crude Oil Falls Towards $82 on High U.S. Stockpiles, Firm U.S. Dollar

Crude oil fell toward $82 a barrel on Wednesday, extending the steepest one day percentage loss in three months in the previous session, on rising oil inventories and a firm dollar. The dollar surged to a one year high against a basket of six major currencies .DXY. It climbed to its strongest since last May against the Swiss franc as share markets around Asia lost ground on heightening fears that Greece's debt woes could spread to other countries.

U.S. crude for June delivery fell 37 cents to $82.37 a barrel by 0459 GMT. The contract dropped $3.45, or 4 percent, to settle at $82.74 a barrel on Tuesday. In post settlement trading, it ended electronic trading at $82.07, down $4.15 or 4.78 percent, the largest one day percentage loss since the 4.99 percent slide on February 4.

London Brent crude lost 32 cents to $85.35 a barrel. "The main influences now are the rise in the dollar, the sovereign concerns in the euro zone spreading into Portugal and Spain. I think a pretty important factor though going forward is the build in oil stocks in the United States," said Ben Westmore, an analyst at National Australia Bank.

"The price at those low $80s per barrel sort of mark is consistent with the market fundamental alone. I would expect oil price to track around the low $80s for the rest of the week." The dollar, which rose 0.37 percent against a basket of currencies on Wednesday, was supported by signs that the U.S. economy was on the mend. Data released on Tuesday showed pending U.S. home sales rose 5.3 percent in March while factory orders increased 1.3 percent. Both numbers handily beat forecasts.

A strong U.S. currency makes dollar denominated commodities, such as oil, more pricey for holders of other currencies and tends to dampen crude prices. Crude oil inventories at the key storage hub at Cushing, Oklahoma, rose by 1.7 million barrels to a record high of 36.3 million barrels, data from industry group the American Petroleum Institute (API) showed.

Overall, U.S. crude stockpiles rose by 3 million barrels in the week to April 30, API data showed, versus analyst expectations of a 1.1 million barrel rise in the latest Reuters poll. Gasoline stocks rose by 1.5 million barrels last week, sharply higher than a rise of 200,000 barrels analysts had expected. Distillates, including heating oil and diesel, rose by 1.4 million barrels, versus expectations of a 1.7 million barrel rise. The U.S. Energy Information Administration's report is set to arrive on Wednesday at 1400 GMT.

Crude oil prices have not been seriously impacted so far from a giant oil spill off the U.S. Gulf Coast. A flotilla of nearly 200 boats tackled a massive oil slick in the Gulf of Mexico on Tuesday, taking advantage of calm weather to intensify containment efforts while a scientist warned that a powerful current could carry the crude to Miami and points beyond.


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Crude Oil Market Commentary For Tuesday Evening

Crude oil closed down $3.44 at $82.75 a barrel today. Prices closed near the session low today amid the EU debt crisis that is playing out. The bulls faded badly today but still have the overall near term technical advantage.

Natural gas closed up 1.6 cents at $4.016 today. Prices closed near mid range today and saw tepid short covering in a bear market. Prices last Friday hit a fresh contract low. The bears have the solid near term technical advantage.

The U.S. dollar index closed up 102 points at 83.42 today. Prices closed near the session high today and hit a fresh contract and 12 month high. European Union sovereign debt troubles will continue to support the dollar index. The bulls have the solid overall near term technical advantage. There are no early technical clues to suggest a market top is close at hand.

Gold futures closed down $11.00 at $1,172.30 today. Prices closed nearer the session low and scored a bearish "outside day" down on the daily bar chart, whereby the high was higher and low was lower than Monday's trading range, with a lower close. Profit taking pressure was seen today following recent gains in gold. Gold prices hit a fresh five month high early on today. Gold was also pressured by a stronger U.S. dollar index today. No significant chart damage occurred today, but strong follow through selling pressure on Wednesday would begin to dent bullish technical momentum in gold.


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Randy Ollenberger: Is Now the Time to Invest in Oil?

Discussing whether now is the time to invest in oil, with Randy Ollenberger, BMO Capital Markets and Thaddeus Vayda, Stifel Nicolaus.




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Crude Oil Tumbles Most in Three Months as Dollar Surges, Stocks Drop

Crude oil declined the most in three months as the dollar strengthened against the euro, curbing the appeal of commodities to investors, and a slowdown in Chinese manufacturing sent global equities lower. Oil fell more than $3 a barrel as the dollar climbed to the highest level versus the common currency in a year on concern the Greek debt crisis will spread. A Chinese purchasing managers’ index fell to a six month low. Prices topped $87 a barrel for the first time in three weeks yesterday on signals the U.S. economic recovery is accelerating.

“Prices are considerably lower because the dollar is very strong and equities are being pounded,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut based procurement adviser. “There’s been a strong reversal over the last 24 hours after we failed to hang above $87 for a second time.”
Crude oil for June delivery fell $3.05, or 3.5 percent, to $83.14 a barrel at 1:53 p.m. on the New York Mercantile Exchange. Oil dropped as much as 4.1 percent, the most since Feb. 4. Futures are up 4.8 percent this year.

Oil in New York rose as much as $1 a barrel yesterday to a 19 month high of $87.15 after the Institute for Supply Management’s factory index climbed to 60.4, the most since June 2004. Economists projected a gain to 60, based on a Bloomberg News survey. Prices last breached $87 on April 6 and 7. Brent oil for June settlement declined $3.05, or 3.4 percent, to $85.89 on the London based ICE Futures Europe exchange.

‘The Nasty Reality’

“Yesterday’s positive economic indicators have been overtaken by the nasty reality in Europe,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It looks like oil will remain under pressure”....Read the entire article.


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New Video: Is it All Over For The Euro?

Things have been bad in Europe recently. Between the travel restrictions due to the volcano and ash, as well as Greece not wanting to conform to strict fiscal policies, problems are adding up and adding weight onto the euro.

It is interesting to note that in the beginning of 2010, everyone was bearish on the dollar. Looking at the market action alone we could see that the dollar has done very well vis-à-vis the euro. This is where technical analysis shines as it is an unbiased viewpoint of the collective wisdom of all market participants.

In this new video we show you how you can trade the euro/USD cross using our "Trade Triangle" technology and come out of winner no matter what happens to Greece, Portugal, or Spain.

Just click here to watch Is it All Over For The Euro? And as always you can watch our videos without registration and there are no fees involved. Please feel free to leave a comment and let us know what you think about the EURO/USD trade.



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Spain is in Pain – US Dollar & Gold Are Safe Havens

It’s been an interesting week with Spain being downgraded as Europe debt crisis widens. This has investors looking at the US dollar in a new light thinking that maybe it’s not that bad of an investment after all. This sent the US Dollar higher along with the price of gold so far this week.

The past 7 days we have seen both the US Dollar and Gold rise together which is not something that happens often. With financial crisis’s popping up around the world I think the US dollar and gold will continue to strengthen (with corrections along the way). I think it will take another 12-24 months before another wave if issues arise in the financial markets and until then we just continue to focus mainly on buying the dips and corrections with the occasional short play in the larger corrections.



SP500 – Daily Chart

On April 14th we saw an extreme level of selling which sent the broad market sharply lower. This sell off was followed by value buyers pushing the prices back up to new 2010 highs.

Well this week we have seen the same extreme selling volume and the question we all want to know is will there be buyers this time around?



ETF & Futures Trading Conclusion

Gold is in a bull market but it was setup for another round of selling but this Spain issue has been a pain. If we had another downward word move on gold to the $1115 – 1120 area it would have washed out the majority of gold bulls resetting it’s self up for a big rally.

The Europe debt crisis has thrown a twist into the picture helping boost the price of gold. Gold could still head lower washing out the weak positions but the picture is fuzzy. Silver did not react much to this news as it’s not really seen as the safe haven gold or the US Dollar are.

As for stock picks and the broad market, it looks and feels like we are about to start a correction. But this week we saw fear in the market again with the VIX and selling volume surging higher to levels which have triggered temporary bottoms in the past. The problem I see here is that some key price levels have been taken out, so the odds are pointing to lower prices in the near future. But Tuesdays panic selling has pushed the market into an oversold condition so we should see a drift upwards for 1-4 days before sellers get active again as they want to sell and short the market at premium prices.

In short, precious metals are not giving any clear price action to take advantage of yet, and the SP500 looks like it’s on its last legs before heading lower for a meaningful correction which should provide a short setup and then a nice long setup once it bottoms out.

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Where is Crude Oil Headed on Thursday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Phil Flynn: Oil On Junk

Oil prices and commodities got slammed on the S&P downgrades. They sent Greece to junk and Portugal is headed in that direction. Once again oil traders are reminded how much of the price of oil is dependent on some semblance of market stability. With the Fed dead ahead, oil traders have to realize that the price of oil transcends what some consider traditional supply and demand fundamentals. It is also a reflection of how the world views the economy and the relative value of the currency backing this commodity.

In the beginning of the financial crisis oil soared towards $147 a barrel and I attempted to explain that things were amiss. The price move in oil was out of line with the five year average price increase that already reflected stunning oil demand growth. I was scoffed at by some when I suggested that the spike in oil might lead to demand destruction. That the world economy had not “decoupled” from the US economy and that no matter what, Europe and China would consume oil even if the US banks started to fail. The naysayer and the blindly bullish say that the price move was just a function of peak oil and the prices would continue to soar higher and that price would have little impact on demand.

Yet I said that oil was being used as a safe haven and a hedge against systemic risk as the sub-prime crisis began to evolve. Of course the skeptics say it was nothing but a case of speculation gone wild. We remember that we were told not to worry because sub-prime crisis was less than 10% of all mortgages, the same way some are saying now not to worry about Greece because it is such a small economy.

We may see oil come back a bit today. The Greece crisis is in the market for the time being and oil may focus less on the loss of demand created by this crisis but by the fact that this crisis may ensure that US interest rates will stay lower for longer than expected. The Fed Fund Futures November contract which had priced in a 74% chance of a quarter point interest rate increase fell 15% after the European downgrade after the news. If the oil market gets the sense that interest rates are going to stay low for a longer and longer period of time, then oil becomes more bullish. It becomes bullish because the dollar will get weaker and it will get stronger as oil already puffed up on cheap printed oil stimulus money, then we can continue to see this global demand growth until the bubble eventually pops.

The Fed meeting will be key! The best way to get that news is watching it on the Fox Business Network where you can see Phil every day! Phil can also be reached at pflynn@pfgbest.com.


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Crude Oil Market Commentary For Wednesday Evening

Crude oil closed up $0.76 at $83.20 a barrel today. Prices closed near the session high today after hitting a fresh five week low early on. Crude oil bulls are fading and need to show more power soon. The next upside price objective for the bulls is producing a close above solid technical resistance at the April high of $87.59 a barrel.

Natural gas closed up 4.2 cents at $4.357 today. Prices closed near mid-range today and did hit a fresh five week high in quieter trading. Bears still have the overall near term technical advantage. Prices are trading sideways and choppy at lower price levels. The next upside price objective for the bulls is closing prices above solid technical resistance at $4.75.

Gold futures closed up $10.00 at $1,172.70 today. Prices closed nearer the session high today and hit a fresh nearly five month high. Gold's gains today again came despite a stronger U.S. dollar and lower crude oil futures prices. Traders this week are buying gold as a safe haven asset and as a hedge against further weakening of the European currencies as the Greek debt crisis appears to be worsening. Gold bulls have the solid near term technical advantage and have gained more upside momentum this week.

The U.S. dollar index closed up 16 points at 82.47 today. Prices closed near mid-range today and hit another fresh contract high on a flight to quality amid the European Union's sovereign debt crisis. The bulls have the solid overall near term technical advantage and have gained more upside momentum this week.


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Crude Oil Daily Technical Outlook Wednesday Morning

Intraday bias in Crude oil remains on the downside for the moment and further decline should be seen to 38.2% retracement of 69.50 to 87.09 at 80.37 or further to 100% projection of 87.09 to 80.53 from 85.63 at 79.07. On the upside, above 82.94 minor resistance will turn intraday bias neutral and bring recovery. But risk will now remain on the downside as long as 85.63 resistance holds.

In the bigger picture, medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal.

So even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Stronger Dollar Sends Crude Oil Bulls to the Sidelines

Crude oil closed down $2.14 at $82.06 a barrel today. Prices closed near the session low today and closed at a fresh five week low close. Prices were pressured by a stronger U.S. dollar index and weaker stock market today. Crude oil bulls are now fading and need to show fresh power soon. The next upside price objective for the bulls is producing a close above solid technical resistance at the April high of $87.59 a barrel.

Natural gas closed down 2.4 cents at $4.327 today. Prices closed near mid-range today in quieter trading. Bears still have the overall near term technical advantage. Prices are trading sideways and choppy at lower price levels. The next upside price objective for the bulls is closing prices above solid technical resistance at the April high of $4.421.

Gold futures closed up $8.00 at $1,162.00 today. Prices closed nearer the session high today, scored a bullish "outside day" up on the daily bar chart and hit a fresh three week high. Gold's gains came despite a stronger U.S. dollar and lower crude oil futures prices. Traders were buying gold today as a hedge against further weakening of the European currencies as the Greek debt crisis appears to be worsening. Gold bulls have the firm near term technical advantage and gained some more upside momentum today.

The U.S. dollar index closed up 86 points at 82.47 today. Prices closed nearer the session high today and hit a fresh contract high on a flight to quality amid the European Union's sovereign debt crisis. The bulls have the solid overall near term technical advantage and gained more upside momentum today.


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Phil Flynn: Oil Is Fed UP!

Oil prices still are having a hard time following through on its breakout over $85 a barrel. Obviously you have to respect that fact that the market has broken out yet at the same time, the bulls have to wonder what the market is waiting for.

It is very possible that the market is waiting for reassurance and permission to buy from our very accommodative Federal Reserve. The Fed has been taking baby steps back from the historic payload of economic stimulus and the oil market fears the impact that the removal of stimulus might have on the price of oil. The oil market has never before experienced the artificial amount of stimulation that it has experienced over the last year and so there is no wonder why there may be some angst building as we get closer to the judgment day. We can talk a lot about the demand growth in China but that too is the product of massive government spending. The Chinese spent 586 billion dollars to prop up their economy and it is unlikely that they will be pumping the economy with that kind of money again. Asian stocks fell hard on rising concerns that China, instead of adding stimulus, will actually be taking it away.

Oil just can’t get going because it is worried about the never ending Greece crisis and the concerns over other weak members in the PIIGS zone. Oil is worried about China and it is worried about what the Fed might say. The Fed has raised interest rates and removed most of its emergency lending programs. Now the market wants to know when the rates will start to rise. Every oil trader in the world is waiting for the answer. The removal of stimulus is a bearish oil event just waiting to happen.

If the bulls cannot get reassurance from the Fed maybe they can get it from Schlumberger. Chief Executive Andrew Gould said he feels that oil near $80 a barrel should hold and that customers will boost spending at oil prices near $80 a barrel. "Our customers will loosen their purse strings on high end technology," Gould said during a conference call to discuss the oil field services company's first-quarter earnings.

There is a lot of oil in storage. Bloomberg News reports that, “Traders increased the number of vessels used to store crude oil by 75 percent last week as the potential profit from storage rose, Morgan Stanley said. There were 21 oil tankers storing dirty products last week, 20 of them are very large crude carriers, up from 12 vessels in the previous week, a Morgan Stanley analyst, said in a report yesterday. Among the nine vessels there are four in Iran. About 41 million barrels of oil were stored in the tankers, Morgan Stanley said, enough to meet more than two days of U.S. consumption. That’s up from 24.5 million barrels a week ago.”

We also need to get prepared for the possible market impact from potential sanctions on Iran. I know that the Iran situation is well known that even with their abundant production of oil, they still do not have the refining capacity to produce what they need in refined products. So it is widely expected that any sanctions on the country will be a ban on gasoline. The AFP is reporting that Iran has increased its gasoline by inventories by about 220 million gallons and plans to boost domestic production to offset possible fuel sanctions according to Nooreddin Shahnazi-Zadeh, the head of National Iranian Oil Refining and Distribution. He claims that, "At the moment the volume of Iran's strategic petrol supplies has increased by over a billion liters" and dismissed the threat of sanctions saying, "it is impossible to impose such limitations in the current situation."

Phil can be reached at pflynn@pfgbest.com And as always watch him each day on the Fox Business Network.


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Crude Oil Falls the Most in a Week as Equities Decline, Dollar Strengthens

Crude Oil fell the most in more than a week as global equities declined and the dollar advanced on skepticism European governments will approve the Greek bailout plan quickly enough to help the country avoid default. Oil lost 1.4 percent after Greece’s largest union said it will stage a strike for a day next month and Germany’s Chancellor Angela Merkel said yesterday that Greece “must do its homework” to reduce its deficit. A stronger dollar reduces the appeal of commodities as an alternative investment.

“Oil is lower because global equities are weaker and the dollar’s stronger,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut-based procurement adviser. Crude oil for June delivery dropped 78 cents, or 0.9 percent, to $83.42 a barrel at 10:13 a.m. on the New York Mercantile Exchange. Earlier, it touched $83.06 a barrel. Prices have risen 66 percent in the past year.
The U.S. dollar rose to $1.3306 per euro from $1.3383 in New York yesterday. The Standard & Poor’s 500 Index dropped 0.4 percent to 1,207.60.

Oil and equities pared their losses after the Conference Board reported confidence among U.S. consumers increased in April to the highest level since September 2008 as Americans became more upbeat about the labor market. The Conference Board’s confidence index rose more than forecast to 57.9 from 52.3 in March, according to the New York- based private research group. The median forecast of economists surveyed by Bloomberg News projected an increase to 53.5.....Read the entire article.

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Crude Oil Intraday Bias is Flipped Back to the Downside

Crude oil's sharp fall from 85.63 dragged 4 hours MACD below signal line and suggests that recovery from 80.53 has completed. Intraday bias is flipped back to the downside and deeper fall should be seen towards 38.2% retracement of 69.50 to 87.09 at 80.37 or further to 100% projection of 87.09 to 80.53 from 85.63 at 79.07. On the upside, above 85.63 will bring another rise to retest 87.09 high. But after all, sustained break there is needed to confirm rally resumption. Otherwise, another fall would still be seen before consolidation from 87.09 concludes.

In the bigger picture, medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.



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Where is Crude Oil Headed on Tuesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Closes Below 20 Day, Signals Still Give Bulls The Advantage

Crude oil closed lower due to profit taking on Monday and below the 20 day moving average crossing at 84.97. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. If June extends last Friday's rally, the reaction high crossing at 87.26 is the next upside target. Closes below last Thursday's high crossing at 81.73 would open the door for a larger degree decline into early May. First resistance is last Friday's high crossing at 85.19. Second resistance is the reaction high crossing at 87.26. First support is last Thursday's low crossing at 81.73. Second support is the 38% retracement level of the February-April rally crossing at 81.18.

Natural gas posted an inside day with a lower close on Monday and the mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Multiple closes above the reaction high crossing at 4.421 are needed to confirm an upside breakout of this month's trading range. If June renews this winter's decline, weekly support crossing at 3.502 is the next downside target. First resistance is the reaction high crossing at 4.421. Second resistance is the 25% retracement level of the October-April decline crossing at 4.4438. First support is the reaction low crossing at 3.967. Second support is the early April low crossing at 3.914.

Gold closed slightly lower due to profit taking on Monday but remains above the 10 day moving average crossing at 1148.40. 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 June renews this year's rally, the 75% retracement level of the December-February decline crossing at 1184.00 is the next upside target. Closes below last Monday's low crossing at 1124.30 would confirm that a short term top has been posted. First resistance is today's high crossing at 1160.70. Second resistance is the reaction high crossing at 1170.70. First support is the 10 day moving average crossing at 1148.40. Second support is the 20 day moving average crossing at 1142.00.

The U.S. Dollar closed higher on Monday and the mid-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If June extends this month's rally, March's high crossing at 82.52 is the next upside target. Closes below the 10 day moving average crossing at 81.07 are needed to confirm that a short term top has been posted. First resistance is last Friday's high crossing at 82.20. Second resistance is March's high crossing at 82.52. First support is the 20 day moving average crossing at 81.22. Second support is the 10 day moving average crossing at 81.07.



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Phil Flynn: Solid Economic Data

Solid economic data keeps the oil bulls dreams alive in an impressive drive to end the week. The market is still getting support from the calendar and found comfort in the fact that housing seemed to blow away market expectations. Sales of new homes increased by a stunning 26.9% over February, inspired by federal tax incentives for buyers that are set to expire in days. Still, as exciting as the numbers were by historical standards, they were not anything to write home about nor do they suggest that without government help they can be repeated. Yet it was enough to get the market to forget about Greece and their problems that had been weighing on the market in the morning.

The housing numbers made us forget all about Greece. Though Greece may be getting bailed out, the question remains if you will be next. Bloomberg News reports that Greece is unlikely to be the last euro nation to need an International Monetary Fund bailout, with Ireland, Spain and Portugal “conspicuously vulnerable, “the budget cuts needed in Europe in many countries are profound.” Bloomberg says that Portuguese, Spanish and Irish bond yields jumped last week as investors questioned their ability to reduce budget deficits and avoid Greece’s fate. Greece on April 23 triggered a 45 billion-euro ($60 billion) rescue package from the IMF and the euro region after its soaring deficit sent borrowing costs surging and sparked concern about a default. At 14.3 percent of gross domestic product, Ireland had the euro region’s largest deficit last year. Greece’s was 13.6 percent; Spain’s was 11.2 percent and Portugal’s 9.4 percent.

Yet despite the problems in Europe the oil market is getting caught up in a seeping wave of increasing economic optimism. Crude oil is getting its drive in part from fears that rates will continue to remain low as demand for the products rise increasing the chances for more commodity price inflation.

The Deepwater Horizon site is said to be leaking about 1000 barrels of oil per day. NOAA says that an attempt to control the leaking well using a Remotely Operated Vehicle (ROV) was not successful, and the well continues to leak. All available assets are being brought on-scene to address well control and cleanup of the floating oil. Over 1000 people are supporting the operational response. Efforts are now focused on gathering more information about the spill (amount, fate and effects), plans for possible undersea containment, drilling relief wells, maximizing oil recovery and readying for shoreline assessments. NOAA says the plan for attacking the spill has elements that try to activate the blow out preventer (BOP), a cut-off valve at the well head using ROVs, then if successful use an undersea dome to contain leaking oil. This process could take several months.

Phil Flynn can be reached at pflynn@pfgbest.com And make sure to watch him everyday on the Fox Business Network!


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Exxon Chevron Showdown

Chevron has been gaining while Exxon has been dropping, but based on valuations and smart money flows Exxon looks like the better investment.



Just click here for your FREE trend analysis for ExxonMobil, ticker XOM

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