Eurozone retail sales dropped sharply in October. Spenders cut back by the largest margin in six months. Trade in the 17 member bloc fell 1.2 %, far worse than the anticipated slip of 0.1%. Exacerbating the distressing report was that the previous report was revised lower. Moreover, according to BNP Paribas, the fourth quarter will be the worst in terms of growth.
The academy of Social Service stated that China’s economic growth will strengthen to 8.2% in 2013, up from 7.7% in 2912. This is in response to the stimulus efforts put forth by the PBoC this year.
The EIA late Tuesday notified the markets that U.S. oil production is now running at 6.5 mm b/d. That is fully 900,000 b/d from the beginning of the year. All of the increase came on state and local lands. None was from federal lands. So the next time Obama tells a half truth you will know a lie when you see it. His claim that drilling increased so much under his watch was not due to his efforts. If the industry relied on his vision we would all be repairing windmills that were destroyed in Super Storm Sandy. Think about it. It took 3 weeks to get power back from normal generation sources.
The situation in Egypt is getting more serious. The demonstrations more numerous and the violence more agitated. It was reported that the President, Morsi, left the Presidential Palace due to the severity of the demonstrations near the structure.
But as one can see from the yearly chart below, Jan-Jan, the spreads are pointing to weakness for the front end. Jan-Jan is rolling over on itself and looks primed for a foray to or below -4.00.
CRUDE: Hi:89.05; Low: 88.35
Although Jan made close to the upside pivot at 89.20, it has been rebuffed in light volume. The structure of the recent ascent is in typical fractal fashion of an A-B-C type correction. Unless Jan can remove 89.20 the negativity remains a potential for this pattern. the minor downside pivot that will confirm a leg to the downside is developing is a break of 88.30. that is the minor downside pivot. The key downside pivot to the intraday picture is 87.40. If the key upside pivot at 89.20 is busted Jan will climb to run to or above 90.33. In the successful puncturing ot hat line will come a quick surge to the 100DMA AT 90.95. That is a sell area on the first pass, but we doubt that Jan makes it to there. the key downside pivot to the intermediate term chart is 85.00. we are looking at selling the rips and buying the dips.
BRENT: Hi: 110.57; Low: 109.67
Jan has bumped its head or is about to on the 100 DMA at 111.00. This has been a formidable level to remain above although the average has been broken from below recently. The key to this market moving higher is Jan’s ability to walk above 110.60 before it succumbs to renewed pressure by falling below 109.20. That is a break of trend support on the daily chart. A daily settlement below that level will tip the ledger in favor of further drops. However, the key downside pivot is 108.45. Jan will have strong resistance at 112.15 to 112.30. The key upside pivot is 112.40. This will be a two-way market, but one that looks like a sell the rally mode early.
RBOB: Hi: 2.6925; Low: 2.67459
Jan is weakening and it appears correct to sell the rallies. Jan has ratio resistance at the 2.6950 to 2.70 level. The minor upside pivot is 2.71. Jan will signal a move through the Tuesday low with a violation of 2.6750. In this event Jan will be eyed to fall to 2.65 to 2.6450. If the API’s are borne out by the DOE INVENTORY, we suspect that this market will be under pressure as will the cracks be forced lower. We are a seller of the rally. This will ideally be at the 2.6850 level with a protective stop above 2.6950.
DIST: Hi: 3.0291; Low: 3.0025
Jan is in a weakening pattern. It ran just above our resistance area, but did not remove the 3.03 pivot. There will be a new low signaled from Tuesday with Jan’s piercing of 3.01. This will set up a potential removal of the last week’s low at 2.9745. On the way there Jan will need to negotiate minor support of 2.99. We are a seller of the rally in the ealy trading session. The ideal place to probe that view is at 3.03 to 3.0350. The minor upside pivot is 3.04. The key upside pivot to the intraday chart is 3.060. A bullish event is the daily settle above 3.0960. This we do not see happening Wednesday.
Nat: Hi: 3.557; Low: 3.507
There was needed a marginal new low to complete this leg to the downside. Although Jan is not out of the bear woods yet, the bovines are lining up with a healthy blast of frigid air plunging deep into Texas. Whether it is too little too late will be determined by the market. Nevertheless, we feel that Jan is at least ready for a retracement. This will be signaled with a break above 2.64. With that occurrence Jan will try the key upside pivot to the intraday chart at 3.72. It is with a break of 3.81 however, on a daily settle basis that will suggest a far stronger response. We are a cautious buyer of the dip. Ideally this will be in the 3.51 level with a protective stop below 3.47.
GASOIL Hi: 940.00; Low: 932.50
Our view on this market Tuesday was that there was likely another leg down to the corrective pattern that was underway from the 960.00 level. This is still the operative model. There appears to be a new low likely from Tuesday is out model is correct. That will ideally be at the 941.00 level with a stop above 944.00. This will keep us more in the lean of selling the rally rather than buying the dip. Breaking trend support at 929.75 by a daily settle will argue for a continued cascade to the 916 to 915 zone. we are a seller of the rally.