Tuesday, June 1, 2004
Issue Contents:
| 09:05 | Good Morning Before the bell |
| 09:19 | The Day Ahead Economic news releases |
| 09:24 | Headlines and Reaction A look at oil. |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:15 | TrendVue Active Trader Today's transcript. |
Good morning. We hope everyone had a good long weekend and is refreshed and ready for the week ahead.
Unsurprisingly Friday was a narrow range day, an inside bar on all major indices, due to light pre-holiday trade.
The upswing on the daily charts remains intact; and as is typical of a strong reversal, price has pushed up to the 50 period EMA quite directly.
Overnight futures currently have S&P500 and Nasdaq index futures pointing to a soft opening - at the time of this snap show, price would open at the cursor point.
ADX had reached high, although not extreme, levels in the 45M time frame. A soft open could be the catalyst needed to generate a pull back of some measure, however price is certainly still within easy distance of retesting the recent highs as well.
Swing traders with open profitable positions need to make a decision here. Take profits if the market retests the highs and fails; or take profits if weakness prevails. Investors will want to move up stops or at minimum ensure that break-even stops have been deployed to protect new positions.
Economic News Releases
- 10:00 - Construction spending for April
- 10:00 - ISM Manufacturing Index for May
For earnings highlights, please see today's WSJ Earnings Calendar. For a list of speeches, congressional testimony, Federal Open Market Committee material, and statistical releases, please visit the What's Next page of The Federal Reserve Board website.
It had to happen, a fresh attack on 'western' oil interests in the Middle East.
Stunning pictures of Saudi special forces raiding the compound served as fresh reminders of the fragility - perceived or real - of the world energy system.
Oil prices reacted predictably after the post-holiday open, surging more than three percent in heavy trade.
The real concern is over stability of supply. Bloomberg:
``There seems to be a specific campaign aimed at the oil infrastructure,'' said Simon Wardell, senior Middle East analyst at World Markets Research Centre in London. ``Saudi Arabia is the concern because there isn't much more they can do to lower prices. It's not inconceivable an attack could go through.''
Affecting supply, is the stability of the massive workforce required to keep production going. Foreign workers are understandably shaken, as nationals from Japan to South Africa consider their safety in context with the broadening trend of attacks directed at them.
With that backdrop in mind, traders have pushed prices near the recent highs.
And our big question is - can it - to the surprise of all - break out and up from here? Typically when a story is front page news, savvy investors know its time to start looking for the exits, but this may be one of those cases where the story has legs and a fundamental shift is at work. Clearly the price of oil is driven entirely now by sentiment backed up by real concerns over the impact of a major delivery interuption.
ADX is at levels typically considered extreme, suggesting that major news of a positive or negative nature is going to affect the price of oil in an outsized manner.
XLE:AMEX ETF is a reflection of the state of consolidation underway in many oil-related names, and has initiated an upswing at the gap open today. While XLE remains in the range of the last three months it is directionless by definition, however we do note that it has managed to set a higher high and is potentially setting a lower low here.
Lets look at some individual names. We find two major currents - producers vs refiners, and a minor theme - international exposure.
Exploration oriented names are generally trading sideways in various consolidation patterns. KMG:
IMO:
While refiners are clearly trending.
TSO
PCO
Strategy - monitor refiners for a retracement in their uptrends.
Monitor exploration / upstream companies for either an upside or downside break of the consolidation zones; we'll also look for special case setups on a name by name basis.
Today's transcript.
Click on the title above to expand this document.
Today's transcript.
Click on the title above to expand this document.