Post by TradingForGod on Oct 23, 2004 18:12:55 GMT -5
The equity markets continue to be weighed down after the break of the 40-day MA a little over a week ago. The S&P tried on Wednesday and Thursday to fight of the selling, finishing near the top of the days’ trading ranges. However, Friday the markets dumped off pretty hard, perhaps pushed lower by concerns about ever increasing oil prices. Whatever the reason, the S&P is at its lowest point since mid-August. Even worse, the Dow Jones Industrials are at their lowest level since late last year. The break-out over downtrend resistance that we say in the S&P amounted inspired very little follow through. The resulting sell-off has fallen just about as far as is reasonable it this drop is simply correcting the rally from early August. Pretty much any additional weakness suggest that the S&P is headed down to the August lows. The Dow is already to, and through, that point.
The Nasdaq continues to perform much better. Even with Friday’s big sell off it still remains above the 40-day MA, at least for now. A close below 1900 though would weaken the technical picture here considerably as well. The stock market needs to find support, and quickly, to avoid a potentially very negative 4th quarter. Perhaps the energy markets can help bring that about.
I think that both natural gas and crude oil are due for significant peaks very soon. Crude oil peaked at 55.50 on Friday, very near one of my two “exhaustion tops” at 56.00. It could be getting VERY close to the peak. Speculative funds have actually been reducing their long positions in crude oil into this rally. I still feel that whenever oil prices peak they should fall back to at least $41. That’s almost $15/bbl lower, but it’s also where oil was only a seven weeks ago. My how time flies. As for natural gas, December futures finished at $9.00 on Friday. The fundamentals for this commodity are very weak. Inventories are at record highs, and that’s with a significant chunk of US Gulf Coast production off-line because of damage from Hurricane Ivan. I believe that natural gas could fall precipitously, maybe all the way back to $6.00 in the next couple of months. If both crude oil and natural gas falter here, the equity markets could benefit as tensions about an economic slow-down ease. Here’s hoping….
God Bless,
TFG
The Nasdaq continues to perform much better. Even with Friday’s big sell off it still remains above the 40-day MA, at least for now. A close below 1900 though would weaken the technical picture here considerably as well. The stock market needs to find support, and quickly, to avoid a potentially very negative 4th quarter. Perhaps the energy markets can help bring that about.
I think that both natural gas and crude oil are due for significant peaks very soon. Crude oil peaked at 55.50 on Friday, very near one of my two “exhaustion tops” at 56.00. It could be getting VERY close to the peak. Speculative funds have actually been reducing their long positions in crude oil into this rally. I still feel that whenever oil prices peak they should fall back to at least $41. That’s almost $15/bbl lower, but it’s also where oil was only a seven weeks ago. My how time flies. As for natural gas, December futures finished at $9.00 on Friday. The fundamentals for this commodity are very weak. Inventories are at record highs, and that’s with a significant chunk of US Gulf Coast production off-line because of damage from Hurricane Ivan. I believe that natural gas could fall precipitously, maybe all the way back to $6.00 in the next couple of months. If both crude oil and natural gas falter here, the equity markets could benefit as tensions about an economic slow-down ease. Here’s hoping….
God Bless,
TFG