Market Overview

Crude Oil - Wall of Worry?




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Industrial production in the U.S. climbed for a second month in December, as the US equity futures continue their markedly bullish tone. MAR13 emini SP 500 futures are climbing again, this morning trading up 2 points to 1467. We reiterate our view that this market will head to 1500 at some point in Q1. We think the 1500 level, if hit, might create psychological impetus for more investors to get on board with long positions as 1500 is a key psychological level.  In terms of the global equity markets, today the biggest mover is the Nikkei index, with the futures trading down 185 points, or 1.7%.  The Nikkei has suffered its biggest one-day fall in eight months after government ministers expressed concerns about the weak yen.

The oft-discussed precious metals markets are having a very quiet day today, with gold trading down 4$ to 1679, and silver is trading down just $.11. There has not been much fundamental impetus to move gold this year. Gold has been essentially rallying for 10 straight years now, and 2013 is starting off the year in a very unexciting way for the gold market. $2000 was a favorite target for many goldbugs, and if 2013 sees the global economy pick back up, we believe gold will head farther away from $2000 rather than closer to it.

Soft commodities are mixed, with sugar trading down below its key pivot of $19. Sugar is down 1.13% today, trading at $.1841. Conversely, Orange Juice and Cotton are both strong today, with OJ futures trading up (after a steep recent sell-off) 1.63% while cotton is trading up 1.61%. Cotton looks to be climbing off of its recent base at the 70 level and we see key resistance at 79.

We focus more in the crude oil futures market this morning. Even though we have seen so much news this year of a widening crude oil supply, crude has still found a way to rally. It tried to head lower in Q4, but ended up building a base at the $86 level, and now has rallied to $94. We don’t see major fundamentals in place for a continued monster rally, but at the same time, from a trader’s standpoint, crude looks to be climbing a wall of worry. We view the next key resistance level at $95. If it does keep rallying, we view the next congestion area at $98.

Crude Oil Futures

Crude Oil Futures

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