The Financials Pit
Review: By PitGuru Kalvin O’Brian
U.S.
Economy
The S&P 500 looks like it will
rebound from the first weekly drop in a month.
The stock market gained after a pullback in oil prices boosted consumer
company shares and Europe’s
largest bank set aside less money than analysts’ estimates for bad American
loans. Interesting how our bad loans
might end up pushing the market up at this point. The US Census Bureau reported exports were
down $2.6 billion in March, to $148.5 billion while imports were down $6.1
billion to $206.7 billion. The bottom
line was $58.2 billion of net imports which was below expectations. This is going to have some significance but
with the dollar’s outlook finally changing this market is looking to break 1400.
With the reports due out this week like Retail Sales, CPI, Industrial Production and Housing Starts the real test
will be if we are above the 1400 mark by week’s close.
Currencies
The Canadian dollar showed a bit
of promise while exports increased in
Canada by 1.6% in March; imports were down .3% resulting in $5.5C
billion of net exports making it the most since May of 2007. Statistics
Canada reported a better than expected unemployment rate even
though it increased from 6.0% to 6.5% in April, with a net gain of 19,000
jobs.
Canada has added 348,000 new jobs to the economy over the past
year. The 1.00 mark is in reach and
unless there is a sell off in crude this could be a good week for the
Canadian.
According to a survey of 31
economists at Bloomberg, the ECB will lower its 4% main refinancing rate to
3.75% by the end of September and 3.50% by year-end. If this estimate is correct it will continue
the descent of the Euro. The anticipation and speculation about this will
continue leading up to the announcement, but the Euro looks technically weak and
I expect this market to be trading lower by weeks end.
The dollar looks to be turning the
tide. Speculators for the first time in
a while look to be pro greenback. With
the expectation of stagnation instead of cuts, and the ECB expected to start
cutting, it appears to finally be time to jump on board and ride the dollar
up.
The Reserve Bank of
Australia expects consumer prices to increase 4.5% by the end of
2008. The expectation is that this will
be followed up by a decrease of 3.25% at some point in
2009.
The Energies Pit
Review: By PitGuru Joe Marshall
The trend for June crude oil
is up. If that is not an understatement, then nothing is. We are witnessing an
historic bull market and we may be just starting. Friday’s rally has again
established new highs for this contract. This market has closed higher now for
six straight days and is approaching an overbought condition. Very tough to call
an upside target as there is no guide. Friday’s close of 125.96 should at least
give you a test of 130 this week, but be careful for corrections down into the
low 120's. You will continue to see 2 and 3 dollar intra day moves. Order flow
was mixed, with long liquidation that did nothing to stop the rally. One
observation, Wednesday we saw much higher than expected inventory numbers, so if
there was a day to slam this thing, that was the day......we closed almost 2
dollars higher.
Natural gas is on the move up
once again. The trend for June is up with very recent action looking strong.
Friday’s close above last week’s high is very bullish, but keep one eye on
crude, as it has put natural gas on its very broad back. Nat gas is following
crude and it is not for us to ask why, but for now don't fight it. Dips holding
in the 1115 area should quickly turn back higher.
The trend for June RBOB
gasoline is up. Now this is a rally that could just be beginning. Like crude,
this market is establishing new highs every day and it is also approaching an
overbought condition. Dips holding the 3 dollar area should quickly turn back
up.
