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Possible Greece Bailout, Gaza Ceasefire Keeps Oil Pit Bulls Edgy

Henry Marchell

Europe’s tenuous plans to rescue Greece have been given a boost as the beleaguered country waits for needed bailout funds. Nevertheless the Euro spoke of optimism Monday as it moved off its recent low. Still waiting for the Spaniards to formally ask for a bailout would be the next bullish outcome for the common currency. For its part the Bundesbank said yesterday that it feared its economy will lose momentum as the Eurozone debt saga wears on. The growth for Germany in the third quarter was reported as 0.2%. It does not take a wild leap of faith to see a negative growth for the fourth quarter. This remains a negative for the energy complex.

So, too, does the diplomatic flurry of activity trying to broker a ceasefire deal between Israel and Hamas. Israel has stepped back from an all-out ground assault, wishing instead to give diplomacy a chance and thereby succeeding in the court of public opinion. Nevertheless, the Israelis have said there can be no truce with missiles still being fired. Iran has also ladened a ship with missile parts that could possibly be used to smuggle these missiles into the Gaza through the Red Sea. These missiles will have larger warheads than Hamas has been using. The payload will be doubled since these missiles can carry more fuel.

CRUDE: Hi: 89.19; Low: 88.53

It appears that Jan has consolidated the gains made Monday. While a ceasefire headline will knock this market down, it is likely that Jan makes a new high before that is seen. This model has minor support at 88.90 to 88.80. The minor downside pivot is 88.50. The minor upside pivot that will confirm the notion of another leg to the upside is 89.30, with a key upside pivot of 89.80. With the successful penetration of that level the bulls will want to see what lies above 90.00. There is the 55 and the 100Dma’s at 90.55 and 90.75 respectively. We are a cautious buyer of the dip at 88.90 with an appropriate stop below 88.65.

BRENT: 111.80; Low: 110.75

Our Tuesday view had Jan starting with a retracement from the Monday high of 112.20. Our retracement target was 110.60 to 110.50 area. We viewed this as a congestion pattern before the next leg to the upside was to be seen. We view this as our operative model for the day. But this will be a two-way day probably. With a punch above the Monday high a pattern will be completing its formative process. This will eye a move to 113.00 to 113.25, with a break of the minor upside pivot at 112.20. The minor downside pivot is 110.50. The key downside pivot is a daily settle below 109.50.

RBOB: Hi: 2.7560; Low: 2.7265

There are a few ways to interpret this structure, but for now we will err on the side of the bulls. This model is based on Dec finding support at 2.72 to 2.7150. The minor downside pivot is 2.71. The minor upside pivot that will suggest a move beyond the 2.77 level is a break of 2.7550. If 2.77 is removed Dec will have a charge at 2.7950 to 2.80. We look to buy the dip at 2.715 with a stop below 2.71. We will also sell a sharp rise above 2.77.

DIST: Hi: 3.0883; Low: 3.0600

Our model for Tuesday had Dec congesting lower before moving to a potential new high from Monday. If this model is correct, Dec will be holding 3.0650 to 3.06. The latter is the minor downside pivot. With a violation of that pivot Dec will fall to test the 00 DMA at 3.0335. We are a cautious buyer of the dip. This will be at 3.0650 with a stop below 3.06, as long as it is prior to Dec, making a new high on the session.

GASOIL: Hi: 956.50; Low: 948.50.

Dec looks as if it will punch higher as the day moves on. It will have minor support at 954.00 to 953.00. The minor downside pivot is 952.00. The key downside pivot to the intraday chart is 948.00. Breaking that level will confirm a short-term top. The initial upside target is the 55 DMA at 960.25. We are a cautious buyer of the dip.

NAT Hi: 3.778; Low: 3.725

There are a few ways to interpret the pattern from the recent 3.835 high. The move down from that level set a wave 2 of a potential larger degree wave 5. What this means is that holding the 3.73 level bodes well for the bulls if Dec can better 3.78. That will then demonstrate the bulls have moved back in charge. The marginal new low this morning was sufficient to complete the leg down from 3.835. The key downside pivot is 3.71. There will be key pattern support at 3.67 to 3.66. The minor downside pivot is 3.65. We are neutral of this market for the early part of Tuesday.


Housing Starts

Released 11/20/2012 8:30:00 a.m. For Oct, 2012

Prior Consensus Consensus Range
Starts – Level – SAAR 0.872 M 0.836 M 0.780 M to 0.873 M

Permits – Level – SAAR 0.894 M 0.865 M 0.830 M to 0.920 M

Market Consensus before announcement

Housing starts spiked a monthly 15.0 percent in September to an annualized pace of 0.872 million units. This was up 34.8 percent on a year-ago basis. The latest increase was led by the multifamily component, which jumped 25.1 percent, following a 3.2 percent dip in August. However, the single-family component also improved, gaining a notable 11.0 percent in September after a 7.3 percent increase the prior month.