The Selling Continues this Morning

On April 4, 2012 by TradingDesk

The minutes of the most recent FED meeting were the big story in the market yesterday, as so many have learned to trade simply on whether or not there will be cheap money available to do so. Once it was obvious that the FED governors were not planning on adding more liquidity at this time, equity and commodity markets sold off sharply.

The selling has continued this morning, as Asian and European markets react negatively to the FED’s stance, and following disappointing debt auction in Spain, which has become the answer to many for the “who’s next after Greece?” question.

RBOB continues to outperform, managing to hold onto slight gains despite both WTI and HO dropping nearly 1%. The API report last night showed a large build in crude, and draws in products, which has helped push RBOB cracks their record high of $40/barrel.

This morning’s ADP report showed another 200k increase in jobs last month, which wasn’t strong enough for some hoping for economic recovery in the US, and not weak enough for others hoping for more FED easing. This private report has been a decent predictor of the BLS report due out Friday, but since both human and electronic markets will be closed for Good Friday, don’t expect much of a reaction from traders either way.

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Early Selloff Turns Into Furious Rally in Energy Prices

On April 3, 2012 by TradingDesk

Q2 started off with a memorable head fake, as a fast early morning sell off turned into a furious rally in energy prices. While there were numerous headlines that were blamed for the action, the reaction in other asset classes was much less dramatic, suggesting that a fresh round of fund dollars being invested into commodities to begin the quarter was a major contributor.

With products now trading more than a dime above where we were this time yesterday, the bearish technical picture that was shaping up has been significantly damaged. RBOB remains the strongest technically, now trading on its high for the year, and only 6 cents from its 2011 high. With RBOB calendar and crack spreads setting multi-year highs, despite news that buyers have been emerging for east coast refineries, it seems clear that the contract is determined to keep its pattern of not peaking until April/May intact.

Stocks are opening the day in the red in quiet trade. It appears that many are waiting for the Fed minutes, released at 1pm today, to take on any major positions.

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For the rest of us who didn’t win the lottery…

On April 2, 2012 by TradingDesk

For those who didn’t retire with their Mega Millions ticket, Q2 is starting off on a somewhat weaker note. After an early pop during the overnight session – pegged to a positive reading in the official Chinese PMI – equity and commodity markets have pulled back following weak PMI reports from across the euro zone, and from the non-official Chinese report. The Euro is also slipping as European unemployment hit a 15 year high, and as rumors swirled about the ability of the PIG countries being able to collateralize their debt.

While a few hours of overnight trade do little to create a trend in the market, technical studies in both stocks and energy futures are rolling over into bearish territory. WTI is leading the way lower, after having broken key support last week, and now is targeting double digits. HO is currently testing key support at $3.15 which will confirm or deny a 2 month old rounding top pattern, with a break here targeting a move to $3.00. RBOB continues to show relative strength, but even the great gasoline rally of 2012 is beginning to show cracks, peg $3.25 as the must-hold value for gasoline bulls.

 CLICK HERE for a PDF of this morning’s charts