Crude Oil Rallies In Risk-On Enviroment
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Gross domestic product grew at a 2.7 percent annual rate, up from a 2 percent prior estimate, revised figures from the Commerce Department showed today, and US equity markets are trading up on the day thus far. Emini SP futures are up almost 8 points, or around .55%. The emini Nasdaq is leading the way in US equity indices, trading up 23.5 points, or .88%. Traders seem to be reacting bullishly to not only recently released GDP data, but also to positive expectations regarding the fiscal cliff. There is sentiment seeming to build that a deal will be reached before the Jan. 1 deadline. If this does indeed occur, we look for US equity indices to rally to new highs for 2012.
In a very interesting scenario, gold is the only precious metal which has not recovered fully from its massive sell off a couple days ago. Silver has blasted up 60 cents today, trading up 1.78%, and palladium is also up a significant 2.40%. Copper has rallied from a base of $3.40 this month, and is now up 2.21% this morning.
Soft commodities are also seeing by in large positive trading, with cocoa up 1.3 percent, cotton up almost 1 percent, OJ up 1 percent, coffee rebounding from the key 150 level at up .81 percent, and lumber leading the way at positive 3%.
We focus on Crude oil this morning. We have been calling for an $82 target, but today’s action is a bullish reversal day. We are still not fully convinced of a longer term rally, but if Crude indeed traverses the $92 level, we will start to believe a longer term move might occur. $92 is our key pivot. $85.50 seems to be a recent floor, and a general risk-on environment plus bullish supply #’s from yesterday’s report is stoking the rally today.
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