Euro stocks and the namesake currency fell Tuesday. The culprit again? The recalcitrant Greeks.
The Finance Ministers come away from the Monday summit without completing negotiations. This forces Greece back into the credit markets to raise the needed cash to pay off maturing bills. The Eurogroup President, Jean-Claude Junker, and Christine LaGarde, the President of the IMF, are arguing over the length of time to give the Greeks to get their budget in order. Lagarde wants the process to go to 2020. Junker would like to see a more timely two years. It is amazing that everyone, and we mean everyone, knows the Greeks will not pay. They haven’t for over 20 years. Moreover, their government officials are profligate liars. To give them more money is insane by Einstein’s definition of insanity: Doing the same thing over and over and expecting a different result.
CRUDE: Hi: 85.63; Low: 84.58
Dec continues to congest lower this morning. The pattern is negative as long as Dec does not remove 85.50. If that is seen it will further neutralize the pattern. But to be clear we think that there is another leg to the downside. The key downside pivot is 84.00. However, looking at the U.S. dollar that is up against the 100 DMA. This suggests that Dec crude will move slightly higher as the dollar retreats from the strong resistance. With a break of 85.50 Dec will climb to test the 86.80 to 87.00 zone. The key upside pivot is a break and five minute settle above 87.00.
BRENT: HI: 108.98; Low:107.50.
The four dollar climb off the 105.35 area appears complete with the 109.40 area high. This model sees Jan retracing to the 107.00 level with a break of 107.50. The upside pivot is a break of 109.50. The key downside pivot is 105.25. We view this as a two way market for Tuesday. Jan will need first to better the rollover gap at 109.11. With that accomplished the rise above 109.50 will be more exciting.
RBOB: Hi: 2.6724; Low: 2.6362
The good news for the bulls is that Dec completed a leg to the downside this morning at 2.6360. The bad news is it is looking as if Dec completed a major wave to the upside at the 2.75 level Monday. This is developing into a short-term negative pattern. There will be selling on rallies. The initial resistance is 2.70 to 2.7050. The minor upside pivot is 2.71. The minor downside pivot is 2.6250, which if busted will net a drop to 2.60 to 2.5950. We are a seller of the rally.
DIST: Hi: 2.9986; Low: 2.9657
It appears that Dec finished a minor corrective leg to the downside with the overnight low of 2.9657. If the model is correct it will result in a retracement back to the 3.00 to 3.0050 area. The minor upside pivot is 3.0110. The key upside pivot is 3.03. A neutral pattern for Tuesday will begin to break down with a drop below 2.9650. The key downside pivot is 2.9420. We prefer to sell the rally initially, but this is a two-way market.
GASOIL: Hi: 932.50; Low: 921.25
It appears that Dec has completed its short-term fall at the 921.00 overnight. This model has Dec retracing to the 931.00 to 932.00, which has been seen. The minor upside pivot is 932.00. The key upside pivot is 942.00. We are in a sell the rally mode. The strong resistance for the pattern is found at 935.00 to 936.00. the key upside pivot is 936.50.
NAT: Hi: 3.611; Low: 3.560
We stated in our evening report that Dec would be signaling a strengthening character by hold the 3.56 to 3.54 area. That was seen thus far and now Dec is challenging the quadruple top at 2.62. There will be stops above that level. This will initial take Dec to 3.68 to 3.70, but with a pop of 3.70 a quick jump to 3.72 to 3.74 will be seen. we are a buyer of the dip. the minor downside ivot is 3.55. the key downside pivot is 3.47. We are a buyer of the dip with a protective stop below 3.55.
Market Consensus before the announcement.
The U.S. Treasury monthly budget report showed a deficit in August of $190.5 billion. Eleven months into the fiscal year, the government’s deficit slowed further in August and was down 5.6 percent vs. this time last year. The biggest improvement was in corporate taxes, which were up 31 percent. Individual taxes, which are a much larger source of income for the Treasury, are also higher, up 3.9 percent. Looking ahead, the month of September typically shows a surplus for the month. Over the past 10 years, the average surplus for the month of September has been $20.0 billion and $3.2 billion over the past 5 years. The September 2011 budget number posted at a deficit $62.8 billion.[caption id="attachment_34157" align="alignright" width="507"]Federal Budget Balance - Stanton Analytics Federal Budget Balance[/caption]