Testing July Energy Highs Possible

On July 27, 2012 by TradingDesk

US GDP for the 2nd quarter was just released, and beat the consensus estimates, with grown seen at 1.5% and the 1st quarter was revised higher to 2%. This is not a great performance, but it is certainly good news that our economy continues to grow despite all of the challenges – domestically and abroad – that we’ve faced this year.

So, why have markets wiped out their overnight gains after this report, shouldn’t they be moving higher?

The simple answer is that our markets are fixated on central bank action. A positive GDP report makes it less likely that the FED will announce any more stimulus measures in their FOMC statement next week. Meanwhile, yesterday’s announcement by the European Central Bank that they were ready to save Europe, is still rippling through markets across the globe, helping to maintain bullish momentum for now.

Energy Prices are back into neutral territory technically, with a slight favor given to higher prices, with a test of our July highs possible. Some caution is warranted given the similarities between this year and last year’s price action, that August is set to be a wild month. Last year saw 50+ cent swings in product prices, and a $23 move in WTI crude.

CLICK HERE for a PDF of this morning’s charts

 

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