Indicators Support Selling In Gasoline, With HO Appearing Less Bearish

On April 24, 2013 by TradingDesk

Tuesday’s trading session was highlighted by a 3 minute, miniature flash crash, when the Associated Press’s News Twitter feed was hacked, and fake reports of explosions at the White House sent many markets tumbling 1%, only to recover immediately once the truth came out. The speed of the drop, and vanishing liquidity during the move prove again how susceptible these markets are to headline reading algorithms, and that this type of volatility should now be expected. With US equity indexes once again challenging all-time highs, expect the debate over whether or not to “Sell by May, then go away” to heat up over the next week.

This morning’s trade has focused on the worst report on durable goods orders in the US in nearly a year, which has erased most of the modest overnight rallies in both US stock and energy futures. After yesterday’s sell-off, RBOB gasoline remains on the cusp of another major move to the downside, once again testing support at $2.70, which should bring a swift drop into the mid $2.50s if it breaks. Both technical and fundamental indicators support more selling in gasoline prices, and if today’s DOE report is nearly as bearish as is expected, that selloff could just happen today.

HO meanwhile appears much less bearish as it attempts to carve out a bottom in prices along with Brent crude and WTI. Some technical indicators have moved into neutral/bullish territory, with the $2.85 range appearing to be the main pivot point to focus on to determine if diesel prices can recover, or if the sellers are merely taking a break.

CLICK HERE for a PDF of this morning’s charts

 

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