Energy Prices Sitting Near Key Short Term Support Levels

On July 24, 2012 by TradingDesk

We’re looking at another red day almost across the board today, as European worries continue to fester after Moody’s downgraded the outlook for all but one of the remaining AAA rated countries – most notably Germany – and the purchasing managers index (PMI)for the Eurozone showed another month of shrinking growth. Likewise, China’s PMI showed another month of contraction, although its reading was the best in 4 months.

With bonds in “risky” countries such as Italy and Spain trading at or near record highs, while bonds for “safe” countries like the US and Germany trading at record lows this week, what is remarkable is that the US stock market continues to hold its bullish trend-line for now. Whether or not this Teflon style trading can continue will likely be a huge contributor to the outlook for energy prices, which still maintain a strong correlation to the major stock indices.

Energy prices are currently sitting near key short-term support levels, after yesterday’s big sell off, and if the overnight sell-off can hold up throughout the day, we’ll be targeting numbers in the low $2.70s over the next week.

CLICK HERE for a PDF of this morning’s charts

 

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